Who gets Tax Credits?
Working Tax Credit is for working claimants: it is provided to boost the income of working people who are on a low income. Entitlement is, amongst other things, dependent upon hours worked.
Child Tax Credit is money paid to people responsible for children.
When someone has a change in their circumstances, depending on what that change is, they may be able to stay on Working and/or Child Tax Credit.
It is no longer possible to make a new claim for Tax Credits. So, if someone is not already receiving Working Tax Credit or Child Tax Credit, they would probably need to claim Universal Credit instead. (If someone is on one of the Tax Credits they can still receive an award for the other one as this doesn't count as a new claim).
If someone makes a claim for Universal Credit, their Tax Credits will be brought to an end straight away.
A very useful and extensive guide to Tax Credits, including links to leaflets, can be found on www.revenuebenefits.org.uk
What if someone is laid off or has their hours reduced?
How someone’s Tax Credits are affected during the Coronavirus pandemic will depend on several factors, eg:
- If the claimant is self-isolating or sick, or
- If they are still employed/self employed or their job has ended
- How long this will last
- If they are claiming other benefits
HMRC has announced that people temporarily working reduced (or no) hours due to coronavirus, or who are being furloughed, will not see a change in their Tax Credit payments - so long as they are still employed or self-employed. This because they will be treated as working their normal hours until the Job Retention Scheme* and Self-Employment Income Support Scheme end 2020, even if the claimant is not using either scheme. They do not need to contact HMRC about this change.
*To be replaced by the Job Support Scheme.
Some people will be better off if they can remain on Tax Credits, whereas others might be better off if they claim UC instead.
But once someone claims UC, there is no going back to Tax Credits, so it is best to seek advice from a specialist benefits adviser before doing anything.
See the other pages in this section for more information.
Sick or self-isolating?
Entitlement to Working Tax Credit depends on the claimant normally working a certain number of hours – see below.
However, when the claimant is off work sick, WTC can normally continue for up to 28 weeks. Claimants are still classed as working their normal hours if:
- They are getting Statutory Sick Pay from their employer
- They are getting New Style ESA
- They are getting National Insurance credits because they have a limited capability for work
- They are self-employed but, had they been an employee, they would be entitled to SSP or NS-ESA.
In the Budget it was announced that in place of the additional £20 per week given in 2021, families on Working Tax Credit would receive a £500 lump sum payment for 2021/22. This includes those families getting Child Tax Credit but no Working Tax Credit purely due to their earnings being too high (ie they would otherwise qualify).