⚠️ Universal Credit (UC) is gradually replacing tax credits, and some other social security benefits. Universal credit is now available across the UK and HMRC state that it is no longer possible for anyone to make a brand-new claim for tax credits. Instead, people are expected to claim UC or pension credit if appropriate. Existing tax credit claimants can continue to renew their tax credits and/or add extra elements to their claim. See our tax credit page for more information. Our understanding is that the majority of existing tax credit claimants will move to either universal credit or pension credit. It is expected that the majority of people who have not reached state pension age, and who continue to claim tax credits, will be invited to move to UC by the end of 2024. You can find out more about this in our universal credit section.
What are tax credits?
Tax credits and benefits
On this page we explain what working tax credits and child tax credits are, how they work and how they compare to other benefits.
What is working tax credit and child tax credit?
There are two tax credits – child tax credit and working tax credit. You can claim one or both of them, depending on your household circumstances. HM Revenue & Customs (HMRC) deals with claims for tax credits.
- Working tax credit (or WTC) is paid to people who work and are on a low income – it does not matter whether you are an employee or self-employed. You do not need to have children to get WTC.
- Child tax credit (or CTC) is paid to people who have children. It is paid in addition to child benefit and you do not have to be working to get it.
Are tax credits the same as benefits?
Tax credits are generally considered to be a benefit, but unlike other social security benefits, they are calculated as an annual amount and paid in weekly or monthly instalments during the tax year (6 April in one year until 5 April the next year). Also, they are dealt with by HMRC whereas most other benefits, including universal credit, are dealt with by the Department for Work and Pensions (DWP).
How do tax credits work?
The amount of tax credits you get depends on a number of factors including the total amount of taxable income you and your partner have (income for the current year and previous year can be relevant for tax credits); whether you, your partner, or your children have a disability or long-term health problem; the number of hours you work; and the amount you pay for childcare.
You must also pass residence and immigration tests.
For more information about how the tax credits system works, and whether you can claim use the navigation on the right. You can also find out more about tax credits on GOV.UK. If you are looking for detailed information you will find the following pages of our website for advisers (Revenuebenefits) useful: