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Thursday, 4 October 2023

Disability benefits - how do they affect tax credits payments?

If you're claiming disability benefits for yourself or your child, you may qualify for extra tax credits - on top of other benefits you're getting. Some disability benefits are also taken into account when the Tax Credit Office works out how much tax credits you're entitled to.

What are the benefits that can help you qualify for extra tax credits?

If you – or your partner – are working and have a disability

Certain sickness or disability-related benefits that you might get - or have recently been getting - can help you qualify for extra Working Tax Credit. For example:

  • you could be getting a benefit such as Disability Living Allowance or Attendance Allowance
  • you might recently have been getting a benefit like Council Tax Benefit with a Disability Premium or Higher Pensioner Premium

For the full list of benefits, plus the other conditions you need to meet to qualify, follow the links immediately below.

If you - or your partner - have a severe disability

You or your partner might get the Highest Rate Care Component of Disability Living Allowance or the Higher Rate of Attendance Allowance. If so, you may qualify for a further amount of Working Tax Credit because of your severe disability. In a couple, the person with the severe disability doesn’t have to be working - as long as one of you is.

If your child has a disability

You can get extra Child Tax Credit if your child gets Disability Living Allowance or the Highest Rate Care Component of Disability Living Allowance. This still applies even if the allowance has stopped because your child is in hospital.

You can also get extra Child Tax Credit if your child is registered blind.

How much extra tax credits can you get?

In this tax year (6 April 2023 to 5 April 2023), on top of your basic tax credits you could get:

  • up to £2,790 a year, that is around £54 a week, if you are disabled
  • up to £3,980 a year, that is around £77 a week, if you are severely disabled
  • £2,950 a year, that is around £57 a week, if your child is disabled
  • £4,140 a year, that is around £80 a week, if your child is severely disabled

The amount of tax credits you are paid depends on other income you have coming in. The higher your income, the lower your tax credits payments.

To find out more about how much you might get, use the online calculator, or call the Tax Credit Helpline.

Disability benefits that count as income for tax credits

When you make a claim for tax credits your income is worked out by adding together things like wages, interest on savings and some benefits. Some types of disability benefit count towards your income and others don't.

Disability benefits that don't count towards your income

These benefits don't count towards your income when your tax credits are worked out:

  • Disability Living Allowance
  • Attendance Allowance
  • Incapacity Benefit (at the short term lower rate paid for the first 28 weeks)
  • Incapacity Benefit - if you claimed it before 1995 and have received it ever since
  • income-related Employment and Support Allowance
  • Severe Disablement Allowance
  • Industrial Injuries Disablement Benefit

Disability benefits that do count towards your income

These benefits do count towards your income when your tax credits are worked out:

  • Incapacity Benefit paid at short term higher or long term rates - 29 weeks or more
  • contribution-based Employment and Support Allowance
  • Carer's Allowance - including any dependency increases

Benefits that might be reduced if you start getting tax credits

Disability benefits like Disability Living Allowance, Attendance Allowance and Incapacity Benefit won't be reduced when you start getting tax credits.

Other benefits you or your partner might be getting, such as Carer's Allowance, should not be affected by your tax credits.

However, some benefits, for example Council Tax Benefit and Housing Benefit, may be reduced if your income goes up. You will need to report any increase in your income to the offices that pay you these benefits when you start getting tax credits.

Provided by HM Revenue and Customs

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