Discover whether you’re eligible to claim working tax credit, and how much you may receive in 2021-22

What is working tax credit?

Working tax credit is a means-tested government payment to help with day-to-day expenses for working people on low incomes.

If you work a certain number of hours a week and have an income below a certain level, you could get up to £2,070 in 2022-23 in working tax credit.

This figure is called the ‘basic element’ of working tax credit. This is the part that everyone claiming working tax credit receives and is based on how much you earn.

There are a number of extra elements that you might also be able to claim, but they depend on your circumstances. We’ll explain what the extra elements are, and who they apply to, later.

You can get working tax credit whether you’re employed or self-employed – you just need to be working in some way.

 

Working tax credit elements in 2022-23

The table below shows the different working tax credit elements and how much each element is worth in 2022-23.

To find out the maximum amount you might be paid, you can add up all of the elements that apply to you. You can also see rates for previous tax years by clicking on the dropdown menu and changing the year.

Element Amount
Basic payment £2,070 a year
A couple applying together Up to £2,125 a year
A single parent Up to £2,125 a year
Work at least 30 hours a week Up to £860 a year
Disability Up to £3,345 a year
Severe disability Up to £1,445 a year
Approved childcare Up to £175 a week for one child; up to £300 a week for two or more children

Depending on how much you earn, this amount may be reduced. We explain how and why your tax credits may be reduced in our section on income thresholds.

 

Am I eligible to claim working tax credit?

It can be hard to know for sure whether you’re eligible to claim and you have to apply to HMRC to find out. But if the following circumstances apply to you, you might be able to claim working tax credit.

If you’re single and don’t have children you must:

  • work at least 30 hours a week.
  • be 25 or older.

If you’re in a couple and don’t have children you must:

  • work at least 30 hours a week.
  • be 25 or older.

However, if you’re disabled and work, or if you have children, you might be eligible for working tax credit if:

  • you’re 16 and over
  • you work at least 16 hours a week

You also need to be a UK resident to claim, but there are a few circumstances where you can receive working tax credit without living in the UK:

  • you’re a citizen of a country in a European Economic Area (EEA) and you work in the UK
  • you’re a Crown Servant and have been posted overseas
  • you’re a citizen of an EEA country living abroad and you receive a UK state pension and/or contribution-based Jobseeker’s Allowance (JSA).

If you’re part of a couple – ie married to, in a civil partnership with or living with a partner – you must claim tax benefits jointly. You can’t opt to claim on your own.

Working tax credit: how much will you get?

Working tax credit is made up of a number of different ‘elements’ or payments. You may be eligible for just one element or for a few different elements, depending on your family circumstances.

Everyone who qualifies for working tax credit receives the basic element. This is worth up to £2,070 during 2022-23, depending on your income.

In addition, you can receive extra elements depending on your circumstances, as we’ve shown in our table above.

The elements you are entitled to are added together. But HMRC reduces the amount you get the higher your income is.

Working tax credit income thresholds

There are income thresholds in place which mean that those on higher incomes will receive a reduced amount of working tax credit.

The amount of working tax credit you receive will start to be reduced if you earn more than £6,770 a year.

For every £1 of income over this threshold you earn per year, the amount of tax credit paid decreases by 41p.

So, if your salary is £8,000 a year, you’ll be earning £1,230 over this threshold.

For each pound, your working tax credit will be reduced by 41p – which can be worked out as 1,230 x 0.41 = 504.30.

This means that the maximum amount of working tax credit would be reduced by £504.30 over the year.

What counts as income?

When applying for tax credit, or renewing your tax credit, there are some types of income you have to report – no matter how much you earn. These are:

  • money earned through employment and self-employment
  • taxable social security benefits
  • student dependent grant
  • miscellaneous income, such as a business start-up allowance.

Other income sources only have to be reported if you earn more than £300 a year from them. Note that if you’re claiming as part of a couple, this £300 threshold is shared between both of you. If you claim alone, you can still earn up to £300 without declaring these sources of income.

These are:

  • income earned on your savings, before tax
  • investments, such as company dividends
  • pensions
  • income from property
  • income from trusts, settlements and estates
  • foreign income.

You don’t have to declare income from tax-free savings interest (earned by money saved in Isas) or rent received through the rent-a-room scheme.

How are working tax credit and child tax credit linked?

It’s possible to claim working tax credit and child tax credit at the same time. If you qualify for working tax credit and are responsible for one or more children, you’ll probably be able to claim child tax credit, too.

When you apply for working tax credit, you’ll be told if you can apply for child tax credit – you don’t have to apply for them separately.

If you have children, there is extra working tax credit you may be able to claim, such as:

  • the childcare element of working tax credit if you are paying for childcare
  • the single parents’ element of working tax credit if you are raising your child by yourself.

Childcare element of working tax credit

The childcare element of working tax credit is an extra allowance to help working parents who spend money on approved childcare.

Approved childcare includes:

  • a registered childminder, nursery or play-scheme
  • an out-of-hours club on school premises run by a school or local authority
  • a childcare scheme run by an approved provider.

With the childcare element of working tax credit, you can claim up to 70% of childcare costs to a maximum of £175 a week for one child, or £300 a week for two or more children.

 

Renewing your tax credit

You’ll usually have to renew your tax credit every year. You’ll receive a renewal pack between April and June, and you’ll have to either fill out and return the form, or call the Tax Credit Office, by 31 July.

You must make sure all of your information is correct and up to date. Failure to do so could mean you’ll have to repay any overpayments you receive and, if HMRC thinks you purposely gave the wrong information in order to get more money, you could be fined up to £3,000.

 

Reporting changes to your circumstances

It’s important to keep HMRC up to date with changes to your income or family circumstances, as some things could change how much you’re entitled to from tax credits.

Some changes must be reported within one month of taking place – failing to do so could end up with you receiving an overpayment that you’ll have to pay back later, and if HMRC thinks you’ve failed to fulfil your responsibilities you could be fined up to £300.

 

If you claim Universal Credit

Universal Credit is the new government benefits model that will eventually replace working tax credit and child tax credit, plus several other means-tested benefits.

It’s being rolled out gradually across the country. You may already have been moved onto Universal Credit, or will be moved onto it soon. When it happens depends on where you live.

If you already receive Universal Credit, you can’t apply for working tax credit, as the payments you’d receive are included in your Universal Credit payment.

 

Working tax credit: your questions answered

We’ve answered some of the most common questions you might have about working tax credit below.