The Family Tax Credit

From April 2003, the Working Families' Tax Credit and the Children's Tax Credit was replaced by the Working Tax Credit and the Child Tax Credit. We've deciphered the small print, so read on to find out how this change affects your benefits and entitlements.

The Working Tax Credit is available to people who are in paid work, regardless of whether they are single, married or have children. The Child Tax Credit is for families with at least one child. According to the Inland Revenue, nine out of ten families will qualify.

In order to receive either credit you need to apply using form TC600 (available by telephoning 0845 300 3900 in Great Britain or 0845 603 2000 in Northern Ireland). Alternatively you can complete the form online by visiting www.inlandrevenue.gov.uk. You may be eligible to apply for one or both tax credits - see below for more information.

Who can apply?

In order to be eligible for either tax credit you must:

• be aged 16 or over
• live in the UK, although some people who do not live in the UK may qualify - see www.inlandrevenue.gov.uk for more information.

The Child Tax Credit is paid direct to the person who is mainly responsible for looking after a child or children. This is usually the mother. Tax credits are no longer paid to employees through company payrolls.

The Child Tax Credit is made up of two elements. First, a family element that is payable to any family with responsibility for a child. If a family has a child under the age of one, it will receive a higher rate, known as the baby element. Second, a child element for each child that you are responsible for. If a child is disabled this is paid at a higher rate.

You are entitled to the Working Tax Credit if you are employed or self-employed and:

• are paid for working 16 hours or more per week
• expect to work for at least another four weeks.

In addition you should:

• be aged 16 or over and have responsibility for at least one child, or
• be aged 16 or over and be disabled, or
• be aged 25 or over and work at least 30 hours a week.

If you are part of a couple, only one of you can receive the Working Tax Credit. This will be the person who is working 16 hours or more a week.

The Working Tax Credit is made up of various elements:

• a basic adult element
• an extra element which is paid to single parents and couples
• an extra element if you or your partner work 30 hours or more a week
• an extra element if you or your partner are disabled - there is an
• additional element if this disability is severe
• a childcare element if you have to spend money on childcare.

How much is the Tax Credit worth?

The amount of tax credit you will get will depend on your annual income and will be based on your income for the year 2001/2002. Higher earners will receive less than those with more moderate salaries.

New tax credit for 2005

At last the government is helping out with the cost of a nanny - find out more.

Call the Tax Credits helpline on 0845 609 5000

Child Benefit Centre  tel: 08701 555540  text phone  0191 2251833

Child Support Agency tel: 08457 133 133

Family Credit Helpline 01253 500050

General benefit information

Click back to read about:

• Child Benefit
• Families with special financial needs
• Single parents

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