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Are you aware that new tax credits come into force next year? Well, here’s everything you wanted to know about child tax credit and working tax credit – but were too confused to ask.
The credit they deserve
Are you bringing up children in a family with a combined income of less
than £50,000?
Or are you on a low income – say less than £12,500 a year
– with or without children, single or in a couple, employed or self-employed?
Congratulations! You will soon be eligible for the new child tax credit
or the new working tax credit, which come into effect from April 2003.
Child benefit will also continue to be paid universally to people bringing
up children.
Around 90% of families with children – or six million people –
are expected to benefit from the new, streamlined tax credit system, which
is releasing £2.7 billion a year for families. It aims to support
parents, reduce child poverty and make working pay more than claiming
benefits.
But even though the new credits will replace and improve upon the present
systems, many people still don’t realise they are eligible.
So read on to find out if you can make a claim …
The child tax credit
This is a single system of income-related support for families with children,
whether you are single, married or living with a partner.
And it applies to families earning a combined income of up to £58,000
– although those earning over £50,000 will receive a reduced
benefit. It replaces the income-related child elements of Income Support
and Jobseeker’s Allowance, the working families tax credit, disabled
person’s tax credit and the children’s tax credit.
For the first time, this credit will be paid directly to the main carer,
usually the mother. And it will apply to some people who are currently
excluded from other benefits, such as students and student nurses.
The child tax credit has two elements:
• the family element – payable to any eligible family, with
extra for families with at least one child under the age of one (the baby
element);
• the child element – for each child or young person you are
responsible for, with a disability element for any child who is disabled,
and a severe disability element any child who is severely disabled. Payments
will be higher for families on lower incomes.
Child Tax Credit and Child Benefit will work together to provide at least
£26.80 a week in support guaranteed for all eligible families; £37.20
a week for families with an income of less than £50,000; and £92.50
a week for families with an income of less than £13,000 a year.
The working tax credit
This is top-up pay for working people on low incomes, whether or not they
have children – and provides extra support for disabled people in
work. It replaces the working families’ tax credit, disabled person’s
tax credit and New Deal 50-plus employment credit.
To qualify for the basic credit, you have to be aged 25 or over, working
30 hours or more a week and on low income. But low income is not a fixed
line.
A single person without children, would get a credit worth £1,245
if they earn £7,500 a year, dropping to £320 at £10,000
a year and nothing at £12,500.
For couples without children, the credit is worth £1,820 on a joint
income of £10,000 a year and £895 on £12,500, tapering
to nothing at a joint income of £15,000 a year.
Beyond this basic element, there is:
• extra for lone parents and couples with children;
• extra if you work more than 30 hours a week;
• extra if you have a disability;
• extra if you have a severe disability;
• extra if you are over 50 and have returned to work after a period
on benefits;
• extra if you use formal childcare while working, to help you pay
for a proportion of the costs.
The Working Tax Credit increases the minimum income guaranteed for a
single person working full time to £154 a week, rising to £183
for a couple working full time.
A disabled person working full time will see their minimum guaranteed
income go from £172 a week to £193 a week.
It is the first time that people aged 25 or more, without children or
a disability and who work more than 30 hours a week, are eligible for
a tax credit.
Do I qualify?
You can find out if you qualify for either of the tax credits by visiting
the website www.inlandrevenue.gov.uk/
taxcredits. And UNISON will be producing some ready reckoners in the spring
to help you work out what you, your colleagues, friends and family can
claim.
Even without children, you might qualify for working tax credit.
How do I claim?
You must claim as soon as possible in order to receive the new credits
when they come into force in April.
If you have access to the internet you can fill in your claim form online.
Or you can claim by post, by filling in a single claim form for the household,
which covers both new tax credits.
You can also get help at an Inland Revenue enquiry centre – look
in the phone directory under Inland Revenue for your
nearest office.
If you are already claiming Working Families Tax Credit, Disabled Person’s
Tax Credit or Children’s Tax Credit, you should already have been
sent a claim pack in the post.
If you are already claiming Income Support or Jobseeker’s Allowance, you will be contacted by the Department for Work and Pensions – you don’t have to do anything now.
Contact the article's author Clare Bayley
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