What is working tax credit?

Updated on 27 June 2018

Working tax credit (WTC) is paid by HM Revenue & Customs (HMRC) to support people who work and are on a low income – it does not matter whether you are an employee or self-employed. On this page we answer questions on entitlement and claiming WTC.

The Government is gradually introducing universal credit, a new benefit which will eventually replace tax credits, and some other social security benefits. Universal credit is being introduced geographically and in areas where the full (digital) service is available, it may no longer be possible to make a new claim for tax credits. Existing tax credit claimants are expected to be moved across to universal credit between 2019 and 2023. You can find out more about this in our universal credit section.

 

Do I qualify for working tax credit (WTC)?

To qualify for WTC you must meet the basic conditions which are:

  • be aged 16 or over;
  • be in the UK; and
  • not be subject to immigration control

You must also work a certain number of hours each week. The number of hours you need to work varies depending on your age and household circumstances.

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How many hours do I need to work to get WTC?

In the case of a single claim:

  • the claimant is aged 16 or over and works at least 16 hours a week and: is responsible for a child or qualifying young person; or
  • qualifies for the disability element of WTC; or
  • the claimant is aged 60 or over and works at least 16 hours a week; or
  • the claimant is aged 25 or over and works at least 30 hours a week.

In the case of a joint claim where there is no responsibility for a child or qualifying young person:

  • the claimant is aged 16 or over and works at least 16 hours a week and qualifies for the disability element of WTC; or
  • the claimant is aged 60 or over and works at least 16 hours a week; or
  • the claimant is aged 25 or over and works at least 30 hours a week.

In the case of a joint claim where there is responsibility for a child or qualifying young person:

  • the claimant is aged 16 or over and works at least 16 hours a week and qualifies for the disability element of WTC; or
  • the claimant is aged at least 16 and is a member of a couple where one partner works at least 16 hours a week and the total number of hours for which the couple work is not less than 24 hours a week; or
  • the claimant is aged at least 16 and is a member of a couple where one partner works at least 16 hours a week and the other partner is incapacitated, in prison, in hospital or entitled to carer’s allowance; or
  • the claimant is aged 60 or over and works at least 16 hours a week.
  • The work done must be employed or self-employed

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I am on an apprenticeship – can I claim WTC?

HMRC say that the hours you work as an apprentice will count as remunerative work for WTC purposes if:

  • you have a contract of employment for your apprenticeship.
  • you are attending a scheme (apprenticeship) where your payment is classed as earnings (as opposed to reimbursement of expenses) and subject to income tax and National Insurance contributions.

But, if you only receive a non-taxable training allowance, monies in connection with participating in the Intensive Activity Period (part of jobseekers’ allowance schemes), a sports award or no money other than tax-exempt discretionary payments, your apprenticeship working hours will not be classed as being in remunerative work.

This means that if you have a contract of employment and your pay is classed as taxable earnings, not just reimbursement of expenses or a non-taxable training allowance, it should be classed as remunerative work for WTC.

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How much will I get?

The amount you get depends on which elements you are entitled to, your taxable income (either for the current year or previous year) and whether an overpayment is being deducted.

The following elements make up a WTC award:

Basic element: 

always included

Lone parent element:   if you are a lone parent
Couple element (Second adult element):  if you are a couple making a joint claim (although some couples may not qualify for the second adult element where one partner is subject to immigration control)
Disability element: if you work at least 16 hours a week, have a disability which puts you at a disadvantage in getting a job and are receiving or have recently received a qualifying benefit. For a couple, if you both qualify, you get two disability elements
Severe disability element:

if you get the highest rate of disability living allowance (DLA), armed forces independence payment (AFIP), the enhanced rate daily living component of personal independence payment (PIP), or higher rate attendance allowance (AA). You do not need to be working to get the severe disability element of tax credits. For a couple, if you both qualify, you get two of these elements added.

30 hour element: 

if you work at least 30 hours a week. Couples with children can combine their hours to meet the threshold to qualify for the 30-hour element, as long as one partner is working at least 16 hours a week. Only one element is paid even if both work 30 hours.

Childcare element:

to help with childcare costs. Not everyone qualifies and not all costs are covered. You must also be using a registered or approved provider. Check the GOV.UK website to see if you qualify.


The GOV.UK website has a tax credits calculator which may you give you a very rough estimate of what you might get. There is also a benefits calculator which includes tax credits on the Entitled to website. You should be aware that the HMRC calculator will show potential entitlement from the day you use the calculator until the end of the tax year whereas the Entitled to checker will show potential entitlement for the whole current tax year (from 6 April to 5 April).

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Things to note about WTC

  • You may still be able to claim WTC if you are off work because you are sick or on maternity, shared parental or adoption leave. Other temporary absences from work may also be covered.
  • It is the hours you normally work that counts for WTC. This may not be the same as your contracted hours, for example if you have regular overtime.

    If you are a term-time worker, your WTC claim should be based on the hours you work during term-time. Payment continues over the school holidays. However, if you are a seasonal worker (and only work a few months each year), you may not be entitled to WTC for the periods you do not work.

  • If you are a foster carer or shared lives carer, HMRC treat you as self-employed for tax credits. You can, therefore, claim WTC for this work.
  • If you are self-employed: when working out your weekly hours, HMRC says you can include not only the hours costed to your client/customer but also time spent on other ‘business’ tasks e.g. trips to wholesalers, book-keeping, advertising, travel. All hours worked must be for payment or in expectation of payment. Since April 2015, a new rule has meant that to claim working tax credit as a self-employed person you have to show that you are:

    HMRC will also be encouraging self-employed claimants to register with HMRC for tax purposes and obtain a unique taxpayer reference number. This is likely to become a requirement to claim WTC from April 2016.

    • Engaged in carrying on a trade, profession or vocation on a commercial basis
    • This must be with a view to realisation of profit
    • The work must be organised and regular

​The way HMRC are applying the test is that for claims where the income from self-employment provides an hourly rate at least equivalent to the national minimum wage for a given number of hours a week, they will consider that the test is passed and where the income is less than that, they are likely to ask for additional information to support the claim. 

If this applies to you, HMRC will write to you and set out the type of evidence they would like to see. Some of the items HMRC might ask for may not be relevant to a particular business and, indeed, you may have additional or alternative information which you think may be more helpful. If HMRC ask you to provide evidence to support your claim, you should reply to them and provide them with as much as you can of the information they ask for, so long as it is relevant to your business activities, and any additional items you think may be useful. If you are struggling to provide everything by the deadline or at all, you should contact HMRC to discuss matters.

You should also register with HMRC for tax purposes and obtain a unique taxpayer reference number, although this is not currently a condition for claiming WTC it does help demonstrate the ‘commerciality’ of your business should HMRC check your self-employment. 

  • If your usual working hours change, your WTC payments may also change. You must tell the Tax Credit Office within one month of the change. If you stop work, or your hours drop below the threshold for your WTC claim, you may get what is called a ‘WTC run on’ for four weeks. This means you should continue to get WTC, even if you would no longer qualify, including all the elements you were previously getting.

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More information

This section of the site gives a brief overview of the basic conditions for working tax credit. For more detailed information, visit the following pages on our website for advisers:

Entitlement – working tax credit

Entitlement – child tax credit

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