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Wednesday, 3 October 2023

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Money, tax and benefits

How your tax credits entitlement is worked out

Your tax credit payments are based on your current personal circumstances, such as whether you work, how many children you have and your annual income. The lower your income, the more tax credits you can get.

What tax credits payments can you get?

When the Tax Credit Office works out your tax credits, they look at what they call the tax credits 'elements' (or payments) that you're entitled to. The elements are based on whether you have children or not, and if you work, the hours you do.

The Child Tax Credit elements

The table below shows the Child Tax Credit payments you could get for bringing up children - providing you qualify. These are the maximum amounts you could get for a tax year (6 April one year to 5 April the next).

The payments apply whether or not you work. You may get a mixture of elements, depending on what you qualify for.

The Child Tax Credit elements	What it means	Current maximum yearly amount
Family element - the basic element	It’s the basic payment if you are responsible for one or more children.	£545
Child element	This is paid for each of your children. It is paid on top of the basic family element.	£2,690
Disabled child element	This is an extra payment for each disabled child you have.	£2,950
Severely disabled child element	This is an extra payment for each severely disabled child you have. It is paid on top of any disability element.	£1,190

The Working Tax Credit elements

The table below shows the different Working Tax Credit payments you could get if you work. These are the maximum amounts you could get for a tax year (6 April one year to 5 April the next).

You may get a mixture of elements, depending on what you qualify for.

The elements	Who it applies to	Current maximum yearly amount
Basic element	The basic amount if you qualify for Working Tax Credit.	£1,920
Couples	Paid if you make a joint claim and is on top of the basic element.	£1,950
Lone parent element	Paid if you’re a single parent bringing up children on your own. It is paid on top of the basic element.	£1,950
30 hour element	An extra payment if you work at least 30 hours a week. It also applies if you’re in a couple, with at least one child, and you work at least 30 hours a week between you. But one of you needs to work at least 16 hours or more a week.	£790
Disability element	An extra payment if you work and have a disability.	£2,790
Severe disability element	An extra payment if you work and have a severe disability. If you’re in a couple, the person with the severe disability doesn’t have to be working - as long as one of you is.	£1,190

Childcare element	An extra payment if you pay registered or approved childcare.	Up to 70% of your costs, subject to a maximum limit as follows: £175 per week if you're paying for one child £300 per week if you're paying for two or more children

How income affects the amount of tax credits you can get

The 'elements' you're entitled to for a year are all added together and are then reduced if your gross income (before tax and National Insurance is taken off) goes above a certain level. The higher your income, the lower your tax credit payments will be.

At a glance entitlement tables

For an idea of the tax credits you could get based on your income, you can use 'at a glance' entitlement tables. Follow the link below that applies to your situation.

The entitlement tables are only a rough guide to how much you could get for the current tax year - ending on 5 April 2013. They will be updated with the amounts for the next tax year on 6 April 2013.

You don't work but have children: entitlement tables

You work but have no children: entitlement tables

You work and also have children

Detailed examples - how tax credits elements are affected by income

For examples of the detailed calculations involved, see 'How income can affect tax credits payments - examples'. The examples cover some common situations, but can't tell you how your own payments are calculated. You can contact the Tax Credit Helpline if you want to understand your own calculations in more detail.

How income can affect tax credits payments - examples

Contact details for the Tax Credit Helpline

If your circumstances change – or you only qualify for part of a year

If either of the following applies to you:

your circumstances change and you're entitled to different elements at different times during the year
you're entitled to tax credits for less than a year

then your payments are worked out on what's called a 'pro-rata' basis. This is a way of working out what proportion of the tax credit elements you're entitled to in a period of time.

Your income is also worked out on a ‘pro-rata’ basis. If your pro-rata income is above a certain level, your tax credit payments will be reduced.