Child Tax Credit can be confusing. Here, we look at who is eligible, how to claim and how much they are worth.
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What is Child Tax Credit?
Child Tax Credit was designed to support parents and other people who are responsible for children.
HMRC will top up your income – whether that’s from benefits or work – if you earn below a particular threshold.
As with Working Tax Credit, it can be quite complicated. Here, we explain what Child Tax Credit you are entitled to, how Child Tax Credit works, how to claim, and how to renew.
Do I qualify for Child Tax Credit?
Unsurprisingly, the most important qualifying aspect of Child Tax Credit is to be responsible for at least one child.
They should be under the age of 16, or up to the age of 20 and in qualifying full-time education, or under the age of 18 and registered with the careers service – if they left school in the past 20 weeks.
How much is Child Tax Credit worth?
Child Tax Credit is made up of a number of elements. There’s the family element of £545, paid to a family with responsibility for at least one child. Next there’s the child element, which is paid per child at £2,780 each.
Then there’s the disabled child element of £3,140, which is paid to those whose disability qualifies. There is also the severe disabled child element for those with more severe disabilities, which is worth £1,275.
If your income is £16,105 or below, you’ll get the maximum amount of each of the elements. When calculating your income, HMRC will combine yours with that of any partner living with you.
Your savings won’t be counted in themselves, but any income from savings will be added in. There are only a few things that fall outside it, including child benefit, maintenance payments and maternity allowance.
Anything you earn above this sum will reduce the total amount you can get, but the taper is very gradual, so that if you have childcare costs and three children you may be able to get some payments even if your household income is as high as £65,000 (or £40,000 with no childcare costs).
How do I claim Child Tax Credit?
The complexity of the system means you may want to start with the calculator on the HMRC website.
If you are entitled to a payment, you can contact the tax credit helpline and ask for Form TC600 (the same form you need for Working Tax Credit).
You will need to supply several pieces of information, including your income from the previous tax year. If your income in this tax year is likely to be very different, let the HMRC know, so you don’t receive significant over- or under-payments.
If you receive an award, you will be paid until April 5 (as the tax year runs from April 6 to April 5).
If your position changes at any time during this period, or your income goes up by more than £2,500 a year, you must let HMRC know to avoid receiving the wrong amount and having to pay anything back.
How do I renew Child Tax Credit?
At the end of the tax year, you will receive a renewal pack, which will need to be dealt with by July 31. This pack may include an annual review notice and nothing else.
If this is the case, and your circumstances haven’t changed, you don’t need to do anything, and your credits will renew automatically. If they have changed, you will need to let HMRC know.
If your pack includes an annual review notice and an annual declaration form, you will need to complete all the information and renew your tax credits in order to avoid your payments stopping.
Universal Credit replacing Child Tax Credit
At the moment, the goalposts are scheduled to move in 2018. That's when Child Tax Credit will be phased out and replaced with the Universal Credit.
In some areas, Universal Credit has already been rolled out, so you can claim this instead.
However, the timetable for Universal Benefits has been called into question, as the change has been far more difficult and expensive than anyone predicted.
It could mean, therefore, that Child Tax Credit is set to stay for even longer.