Tax Credits

Tax Credits

There are two main elements of tax credits: the Working Tax Credit and the Child Tax Credit.

Working Tax Credit (WTC) is available to employees and the self employed who usually do 16 hours or more paid work per week and who are aged 16 or over and are either responsible for one or more children or are disabled, or are aged 25 or over and usually work at least 30 hours a week, or are aged 50 or over and have recently been receiving a specific benefit. If both members of a couple satisfy the conditions, there is only one credit and they may decide which of them will receive it. From 6 April 2011 individuals aged 60 or over will qualify for WTC if they work at least 16 hours per week, regardless of whether they have dependent children.

Working Tax Credit may also include an element of payment support for approved childcare.

Individuals are entitled to Child Tax Credit for each child they are responsible for if the child is under 16 or under 20 and in approved education and training.

An individual does not need to be working to claim Child Tax Credit.

For all tax credits the maximum amount is reduced by a percentage of a couple’s income.

Working Tax Credits (WTC) 2016/2017

Basic Element Couple & Lone
parent element
30 Hour Element Disability Entitlement Severe Disability Element
£1,940pa £2,010pa £810pa £2.970pa £1,275pa
£37.31pw £38.65pw £15.57pw £57.11pw £24.52pw

Childcare Element 70% of cost max / max 1 child
£300pw / £175pw

Childrens Tax Credit (CTC) 2016/2017

Family Element Child Element Disabled Child Element Severley Disabled Child Element
£545pa £10.48pw £2,780pa £53.46pw £3,140pa £60.38pw £1,275pa £24.52pw

HOW WTC/CTC IS CALCULATED

Those entitled to CTC only: income less than £16,010pa or £308pw – full CTC.
Those entitled to WTC & CTC income less than £6,420pa or £123.46pw – full WTC & CTC
Tax Credits reduced by 41p for every £1 over the threshold.

Disregard for year on year increase in income of £5,000.
Disregard for year on year of reduction in Income of £2,500.

Pension Credit

The figures to be used in calculating Pension Credit entitlements are 2015/2016 2016/2017
Standard minimum guarantee
– single person £148.35 £155.60
– couple £226.50 £237.55
Additional amount for severe disability
– single / each disabled spouse £61.10 £61.85
Additional amount for carers £34.20 £34.60
Savings Credit – single person
– threshold £120.35 £133.82
– maximum £16.80 £13.07
Savings Credit – couple
– threshold £192 £212.97
– maximum £20.70 £14.75
Disregards
Standard earnings £5.00 £5.00
Couples ‘s earnings £10.00 £10.00
Higher earnings £20.00 £20.00
(carers, part-time fireman etc)
War disablement pension £10.00 £10.00
War widow’s pension £10.00 £10.00
Armed Forces Compensation Scheme £10.00 £10.00
Widowed parent’s allowance £10.00 £10.00
Income from a subtenant+ £20.00 £20.00
Income from investments The capital disregard remains at £10,000 and the deemed weekly income from capital in excess of the disregard remains £1 for each £500 or part thereof. (Also, certain capital is ignored altogether, including funeral prepayment plans and the surrender value of life assurance polices.)+For income from a boarder, the disregard is £20 plus half the balance of the amount paid by the boarder