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Info Centre - Child tax credits

This article is published from the Money for Mums website: www.moneyformums.co.uk

Once your baby has arrived, you can claim Child Benefit, which is the only State benefit that’s given to every family in the UK, regardless of your individual circumstances. You’ll receive weekly payments of £20 for your oldest child and £13.20 for each of your other children.

To claim it, you will need to have your child’s original birth certificate and a Child Benefit claim form. You should find one of these in the ‘Bounty Pack’ that every new mother receives when they’re in hospital or you can download a form from www.hmrc.gov.uk/childbenefit/forms.htm

It’s very common for people to assume that they will not be eligible for benefits over and above the Child Benefit payment that everyone is entitled to. This is not necessarily the case though. In fact, the vast majority of UK families are eligible for additional financial assistance. The most commonly misunderstood one is Child Tax Credits from the Government. This is tax-free income for households with children. These are made up of a number of elements and are worth different amounts as they are means-tested based on your circumstances.

How much could I receive?

You can claim Child Tax Credits whether you’re in work or not. You are eligible as long as your family income is no more than:

  • Around £58,000 a year if your children are over one year old or
  • Around £66,000 a year if you have a baby under one year old.

There is a family element that most families get and a child element payable for each child, and you might receive extra if your child has a disability.

What are the different elements of Child Tax Credit and how much are they?

Element Description
Maximum Award 2009
 

Family

 

The basic element for families responsible for one or more children.

 

£545 per year

 

Family – child

under one year old

For families responsible for one or more children under the age of one.

Note: only one payment may be available regardless of how many children under the age of one.

 
 

£545 per year

 

Child

 

For each child or young person you are responsible for.

 

£2,235 per year

 

Disability

 

This is one payment for each child you are responsible for if you are receiving Disability Living Allowance for the child, or the child is registered blind or has been taken off the blind register in the 28 weeks before the date of claim.

 

£2,670 per year (an additional £1,075 is awarded if your child is severely disabled)

   

 

Source: HMRC www.hmrc.gov.uk/taxcredits/payments-worked-out.htm

All of the above are maximum payments and your eligibility for them is means tested. Therefore, the more you earn the less you will receive and vice versa.

How much could I get?

The main variables to determine this are:

  • If you are single or in a couple.
  • How many hours you (and your partner) work in a week.
  • How many children you have.
  • If any of them are less then 12 months old.
  • The cost of your childcare.
  • Your income.

Ultimately, this is something that’s based on your individual situation so you should check with the HMRC.

 

Claiming tax credits

You need to fill in a claim form available from the Tax Credit Helpline on 0845 300 3900 (call charges may apply). They can also give you help filling it in. When you make a claim, you’ll need to give HMRC details of your income for the last tax year. A tax year runs from 6 April one year to 5 April the next year. To make your claim you might need the following information to hand:

  • Your National Insurance number.
  • Your Child Benefit reference number.
  • Your P60 or wage slips for the last tax year if you were employed.
  • Details of your income for the last tax year and your unique tax reference number (UTR) if you were self-employed.
  • Details of any benefits you get like Contributions based Jobseeker's Allowance or Carer’s Allowance.
  • Details of other income you get like savings interest, pensions or rental income.
  • Details of any childcare payments you make if you use a registered or approved provider, including, for example, an out of school hours club on school premises.
  • Details of the bank or building society account you want your tax credits paid into.

You’ll get a set of notes with your claim form that will help you fill it in but don’t forget to use the helpline if you need it.

How are they paid?

Child Tax Credits are paid directly to your bank or building society. As they are a state benefit, you are not taxed on this income.

 

Working tax credits – childcare element

You may be able to get Tax Credits to help with the cost of childcare while you are working. You’ll need to be working at least 16 hours a week, although it’s possible you could still qualify as long as you were working the same amount before you went on maternity leave.

How much could I receive?

You can actually receive up to 80% of the cost of your childcare, up to a maximum of £175 a week, if you have one child. This increases to £300 a week if you have two or more children. The exact amount depends on your income, the lower it is the more you’ll receive. However, if you claim Childcare Vouchers from your employer the value of the vouchers you receive will be taken off the amount you can claim through Working Tax Credits. For example, if you claim the full £243 per month vouchers from your employer, the monthly amount of childcare help you can claim through Working Tax Credits reduces by this amount.

It's useful to work out which will give you the greater benefits as it's not always beneficial to take vouchers. As a general rule, if you earn under £25k per year you're probably better off only using tax credits, but if you earn over £35k per year you're probably better off taking vouchers.

What type of childcare qualifies?

They must be a Government registered or approved childcare provider and could be a childminder or nursery. The following bodies register childcare providers in the UK:

  • Ofsted in England
  • The Care and Social Services Inspectorate for Wales
  • The Scottish Commission for the Regulation of Care
  • A Health and Social Services Board or Trust in Northern Ireland

It’s always advisable to use a properly registered provider.