A Guide to Working Tax Credit in the UK

What is Working Tax Credit?

Working Tax Credit is a low-income support designed to top up your earnings. Depending on your circumstances you can get up to £2,500 a year from Working Tax Credit, or up to £3,935 if you have a disability.

You can only get Working Tax Credit if you already receive Child Tax Credit and have claimed Working Tax Credit in the past year.

You can’t make a new claim for Working Tax Credit as each tax credit is being replaced by Universal Credit. The Department for Work and Pensions (DWP) plans to move all existing tax credit claimants onto Universal Credit by the end of 2024.

Who is eligible for Working Tax Credit?

Working Tax Credit UK is a means-tested benefit for people who work but earn a low income. You may be employed or self-employed. You need to be a UK citizen to apply.

Working Tax Credit eligibility rules mean you need to work at least 16 hours a week to qualify. But what counts as a low income, and exactly how many hours you need to work, depends on your circumstances.

You can only make a claim for Working Tax Credit if you already get Child Tax Credit.

Eligibility criteria

How many hours you need to work each week to meet Working Tax Credit eligibility depends on your age and circumstances, as shown in the following table.

If you are a couple with at least one child, you might be able to claim Working Tax Credit if both of the following apply:

1. Between you, you and your partner work less than 24 hours a week.
2. You work at least 16 hours a week.

One of the following must also apply:

• You’re disabled
• You’re aged 60 or above
• Your partner is getting benefits because of disability or ill health
• Your partner is entitled to Carer’s Allowance or Carer Support Payment (in Scotland)
• Your partner is in prison or hospital

Eligibility if you are self-employed

If you are self-employed, to qualify for Working Tax Credit your self-employed work must be “commercial, regular and organised” and you must aim to make a profit.

You may not qualify for self-employed tax credits if you do not:

• Make a profit or have plans to make a profit
• Work regularly
• Keep business records, such as invoices and receipts
• Follow the rules that apply to your work, such as having specialist insurance or a licence

Income thresholds and limits

There's no set limit for income for Working Tax Credit. Instead it depends on your circumstances (and those of your partner, if you have one).

You can normally claim Working Tax Credit on a higher income than some other people if you have children or pay for approved childcare, or if you or your partner are disabled.

How to apply for Working Tax Credit

You can only make a Working Tax Credit application if you already get Child Tax Credit. If you are on a low income and don’t get Child Tax Credit, you should apply for Universal Credit instead.

If you and your partner are State Pension age or over, you might be able to apply for Pension Credit.

Application process

To complete a Working Tax Credit application, you need to update your existing Child Tax Credit claim by reporting a change in your circumstances to HM Revenue & Customs (HMRC).

How much Working Tax Credit can you get?

If you work a certain number of hours a week, and have an income below a certain level, you could get up to £2,435 Working Tax Credit in 2024/25.

This is called the 'basic element' of Working Tax Credit. Everyone claiming Working Tax Credit will get this and it's based on how much you earn.

You may get extra money depending on your circumstances. Other factors leading to Working Tax Credit include:

• Being lone parent
• Being a couple
• Paying for childcare
• Working 30 hours or more per week
• Having a disability
• Being severely disabled

Working Tax Credit is complicated. A benefits calculator can help you calculate how much you may be entitled to.

Can Working Tax Credit help with childcare costs?

You might be able to claim the childcare element of Working Tax Credit if you:

• Work at least 16 hours a week (both partners, if you’re a couple)
• Pay for childcare
• Are employed or self-employed

The childcare support element of Working Tax Credit helps you pay up to 70% of your childcare costs up to certain maximum weekly limits. The rates for the 2024/25 tax year are shown in the table below:

Documents required

You will need the following information to claim Working Tax Credit:

• Your National Insurance number
• Proof of your identity
• Proof of your annual income for the previous tax year (bank statements or payslips)
• If you live with a partner, their details and income

HMRC contact information

The following table shows how to contact HMRC about tax credits:

Benefits of Working Tax Credit

Financial benefits

Working Tax Credit will boost your income if you are on a low income. Getting Working Tax Credit means you won't be affected by the Benefits Cap, which limits the total amount in some benefits that people of working age can receive.

Additional support

Receiving Working Tax Credit may mean you are entitled to additional support, such as:

• Free dental treatment
• Free eye tests
• Cost of living payments (during Covid)
• Being able to open a Help to Save account (this gives you up to a 50% bonus from the government on your savings).
• Being eligible for cheaper ‘social’ broadband or mobile phone tariffs

How Working Tax Credit interacts with other benefits

Working Tax Credit and other benefits interact with each other. Working Tax Credit counts as income when working out your entitlement to most other means-tested benefits.

If you get Working Tax Credit, you may get less:

• Housing Benefit
• Income Support
• income-based Jobseeker’s Allowance
• income-related Employment and Support Allowance
• Pension Credit

If you have children:

• Child Benefit is not affected by Working Tax Credit
• You won’t be able to get Working Tax Credit at the same time as claiming Tax-Free Childcare.

Handling changes in circumstances

It’s important to report to HMRC any change in your circumstances in your family life or work as the changes could affect how much Working Tax Credit you get.

You should check all your information is correct when completing your tax credits renewal.

What to report to HMRC

You must report the following to HMRC:

• Any changes in living arrangements – if you move in with a partner, get married or form a civil partnership, separate or divorce
• The death of a child or partner
• Your child stops going to childcare for four weeks or more when they would normally go
• Childcare costs stop, go down by £10 or more a week, or you start getting help with them
• A child over 16 leaves education or training
• Your childcare provider is no longer registered or approved
• Your working hours fall below 30 hours a week (combined if you’re in a couple with children)
• Your working hours fall below or go above the minimum required to qualify
• You go abroad for eight weeks or more
• You leave the UK permanently or lose the right to live in the UK
• You start working for less than 16 hours while claiming childcare costs (some exceptions apply)
• You have been on strike for more than 10 consecutive days

You also need to tell HMRC if you:

• Increase your income by £2,500 a year or more
• Increase your working hours to 30 hours or more a week (combined if you’re in a couple with children)
• Have a baby or take responsibility for another child
• Start or stop claiming benefits for yourself or a family member, or those benefits change
• Start or stop having a disability that puts you at a disadvantage in getting a job
• Get certification that your child is blind, or their certification ends
• Start paying for registered or approved childcare
• Stop getting help with childcare costs
• Change your bank details
• Move house
• Change your childcare provider
• Change your gender

Impact on Working Tax Credit

A change in your circumstances could result in your tax credits going up or down.

You should report any changes in your circumstances to HMRC as soon as possible. This will ensure you get the right amount of tax credits. If you have been overpaid, you’ll need to pay back the money.

If your tax credits stop, you cannot claim tax credits again.

You normally need to report changes within one month. You could be fined up to £300 if you don’t report certain changes within a month, and up to £3,000 if you give wrong information.

Frequently asked questions about Working Tax Credit

When are tax credits ending?

Working Tax Credit and Child Tax Credit are ending on 5 April 2025. They are being replaced by Universal Credit as part of the government’s Universal Credit transition plan.

What is a Migration Notice?

The Department for Work and Pensions is moving everyone claiming tax credits on to Universal Credit. When it’s your turn it will send you a Migration Notice in the post.

The letter will ask you to claim Universal Credit within three months from the date the letter was sent out. You won’t be moved to Universal Credit automatically – so make sure you claim.

You shouldn’t be worse off on Universal Credit than you were on tax credits. When you start claiming Universal Credit, your tax credits will stop.

Renewing your claim

If you’re claiming Working Tax Credit, you’ll be sent a renewal pack. This will tell you if you need to do anything to renew your tax credits. If your renewal pack has a red line and says ‘reply now’ you’ll need to renew your tax credits by the date shown on your renewal pack.

You can renew Working Tax Credit in the following ways:

• Online
• Using the HMRC app
• Phone
• Post

Covid-19 updates

There were several changes made to Working Tax Credit rules as a result of the Covid pandemic. These Covid-19 support measures were temporary and most have ended.

Brexit impact on tax credits

State benefits, including Working Tax Credit and Child Tax Credit, are set by the UK government and are therefore not affected by Brexit.

Summary: maximising your Working Tax Credit

The government is ending Working Tax Credit and moving everyone to Universal Credit. Most people will have already renewed their Working Tax Credit for the final time before tax credits end in April 2025.

If you are confused about how this change will affect your income you can get help from Citizens Advice or MoneyHelper.