Child Tax Credit explained

What is Child Tax Credit?

Child Tax Credit is a means-tested benefit that gives you extra money to help with the costs of raising children.

The amount you’ll get depends on:

1. The number of children you have.
2. Whether any of your children are disabled.
3. Your annual income.

To get the maximum amount of Child Tax Credit, the income threshold is currently £19,995. For every £1 you earn over this per year, your tax credit amount drops by 41p.

How does Child Tax Credit work?

Child Tax Credit is paid until the September after your child’s 16^th birthday. From then on, your child will be classed as a young person.

To continue to get Child Tax Credit after this, your child must be aged between 16 and 20 and in full-time education or approved training (with no salary).

Who is eligible for Child Tax Credit?

You can only get Child Tax Credit if you’ve claimed it in the past year, or if you get Working Tax Credit.

You don’t need to be working to get Child Tax Credit. But you will need to be:

• At least 16 years old
• Responsible for at least one child – you don’t need to be the child’s parent, but you must be their main carer

You usually need to live in the UK to claim.

How much Child Tax Credit will I get?

Working out how much Child Tax Credit you may get can be complicated.

If your children were born before 6 April 2017, you could get:

• The ‘child element’ of Child Tax Credit for all your children
• The basic amount, known as the ‘family element’

If one or more of your children were born on or after 6 April 2017, you could get:

• The child element of Child Tax Credit for up to two children
• The family element if at least one of your children was born before 6 April 2017

The table below outlines the Child Tax Credit rates for 2024/25:

Source: Gov.uk

The disabled child element provides additional financial support for children with disabilities or long-term health problems. A child or young person is classed as disabled if:

• They receive Disability Living Allowance or Personal Independence Payment (PIP)
• They receive disability assistance (in Scotland)
• They are certified as severely sight-impaired or blind

What is the two-child limit?

The two-child limit took effect from 6 April 2017. It means you’ll now only receive the child element of Child Tax Credit for up to two children.

The rule applies if you had your children after 6 April 2017. If your children were born before this date, you’ll get the child element for all of them. So, if you have three children who were all born before 6 April 2017, you’ll get the child element for all three of them.

Exceptions to the two-child limit

In certain circumstances, you could receive Child Tax Credit for more than two children born after 6 April 2017. This includes if:

• The child is the second (or more) child born in a multiple birth (twins, triplets, etc)
• A child you’ve been claiming for has a child of their own
• You have adopted the child
• You look after the child as a friend or family carer
• The child was born as a result of non-consensual conception

How to claim Child Tax Credit

If you’re already getting Working Tax Credit and you want to change your claim to get Child Tax Credit, you can:

• Contact HM Revenue and Customs (HMRC) on 0345 300 3900; or
• Fill in a form to manage your tax credits online

Tax credit claims must be renewed every year by 31 July. If you don’t do this, your payments could be stopped, and you may have to pay back some of your tax credits.

If you already receive tax credits, you should receive a renewal pack in the post between April and July. If you don’t receive it by July, contact the tax credits helpline on 0345 300 3900.

You won’t need to do anything if your renewal pack only asks you to check whether your details are correct. In this case, your tax credits will automatically renew.

But if your renewal pack has a red line and says, ‘reply now’, you must fill in the relevant forms and send them back by post. Alternatively, you can call HMRC and renew over the phone or fill in an online form.

You will usually need to supply the following information and documents:

• National Insurance number
• Proof of income, such as bank statements or payslips
• Proof of ID, such as your passport if you need to register for a Government Gateway account

How to report a change in your circumstances

If your circumstances change, you should inform HMRC within one month or you could be fined up to £300. You must let HMRC know if:

• Your living circumstances change - for example, if you move in with a new partner, get married or form a civil partnership, or you get divorced, and your partner moves out
• Your child or partner dies
• Your child stops going to childcare for four weeks or more (and they normally go)
• Your childcare costs stop, go down by more than £10 a week or you start getting help with these costs
• Your child leaves home or is taken into custody
• Your working hours fall below 30 hours a week
• Your child leaves approved education or training

You can report these changes online. If you give incorrect information, you could be fined up to £3,000.

Do I have to move to Universal Credit?

Tax credits end on 5 April 2025. That means you’ll receive a letter this year if you are eligible for Universal Credit or Pension Credit instead. You must be over State Pension age to get Pension Credit.

Look out for a letter called a ‘Universal Credit Migration Notice’ from the Department for Work and Pensions (DWP). This will tell you when your existing benefits are stopping and how to claim Universal Credit. It will also include a deadline by which you need to have claimed. Your transfer won’t be automatic.

Frequently asked questions

What’s the difference between Child Benefit and Child Tax Credit?

Child Benefit and Child Tax Credit can be claimed at the same time. Although both are government payments, Child Benefit isn’t means-tested. That means many more people can claim it.

However, if either you or your partner earns more than £60,000 a year, you will have to pay some or all of the Child Benefit back to the government through the high-income Child Benefit charge.

How is Child Tax Credit paid?

You can choose to receive your Child Tax Credit every week or every four weeks from the date of your claim up to the end of the tax year. The payment will go straight into your bank account.

Can I get Working Tax Credit and Child Tax Credit?

If you qualify for Child Tax Credit and you work, you might also be able to get Working Tax Credit if you’re on a low income. You won’t need to apply for these benefits separately as you’ll be told whether you qualify for Working Tax Credit when you apply for Child Tax Credit.

Summary and conclusion

Child Tax Credit is an important benefit that can help you with the cost of raising a child if you’re on a low income. However, keep in mind that unless you already claim it, or you’re claiming Working Tax Credit, you won’t be able to make a new claim for Child Tax Credit. Instead, you’ll need to apply for the child element of Universal Credit.

You can find out more about these benefits through MoneyHelper and Citizens Advice.