Working Tax Credit (WTC)

Who Can Claim Working Tax Credit?

There are four routes to qualifying:

  1. You have a child living with you - you and/or partner work over 16 hours a week.
  2. You have a disability - that puts you at a disadvantage getting work and work over 16 hours a week.
  3. You are aged over 25 - without children or a disability and work 30 hours or more a week.
  4. You are aged over 50, have been out of work for 6 months or more and work 16 hours or more a week.

The basic element of WTC

WTC is made up of several elements. The basic element is included in every WTC award. If you don’t qualify for a basic element you don’t qualify for WTC. There are four conditions to the basic element:

  • you are working at the date of claim - or you are about to start work within 7 days, AND
  • the job is likely to continue for at least 4 weeks, AND
  • the work is done for payment, or in expectation of payment. AND
    • or your partner are responsible for a child or qualifying young person, OR
    • are at a disadvantage getting work because of disability (see page 137) OR
    • meet the conditions for the 50+ element
  • OR, you are aged 25 or more and work for 30 hours in all other cases.

Hours of work and remunerative work

These are the hours normally worked. It does not include customary or paid holiday or any unpaid time for meals or refreshments.

The work has to be remunerative. Some work is not counted, such as voluntary work, caring work for which payment is disregarded, participating in a JSA Intensive Activity Period, on a training scheme (for which an allowance is paid), participating in an employment zone programme, or receiving a sports award with no other payment expected.

Treated as being in work

You count as being in qualifying work (remunerative and for enough hours) during absences from work:

  • when you receive Maternity Allowance or Statutory Maternity Pay, OR
  • when you receive Statutory Paternity Pay or Statutory Adoption Pay, OR
  • when you receive Statutory Sick Pay or would have but for the fact that you are self-employed, OR
  • during breaks in a recognisable annual cycle of seasonal or term time working, OR
  • during gaps of up to 7 days between jobs

Maximum Working Tax Credit

Your maximum WTC is made up of up to eight elements:

  1. Basic element - included in every WTC claim that meets the criteria. See the conditions above.
  2. Second adult element - if you are claiming jointly with a partner of the opposite sex, (unless one of you gets the 50+ element and neither of you work for over 30 hours a week).
  3. Lone parent element - if you are a lone parent of a qualifying child
  4. 30 hours plus element – if you (or a partner) work 30 hours or more a week. If you and a partner have a dependent child/young person, you can add your hours together to make up the thirty.
  5. A Severe disability element – an extra amount per adult getting DLA Care (Higher Rate) or AA (Higher Rate)
    • Are aged at least 50, AND
    • started work in the last 3 months, AND
    • work at least 16 hours a week, AND
    • for at least 6 months prior to starting work were receiving (or a partner was claiming for you as their adult dependant) either Income Support, JSA, Incapacity Benefit, SDA or Retirement Pension with Pension Credit, OR
    • were receiving these benefits for less than 6 months, but immediately prior to receiving them you were receiving Carers Allowance, Bereavement Allowance or Widowed Parent’s Allowance There are two rates of the 50+ element depending on whether you work 16 to 29 hours or 30 hours +.
  6. Disabled worker element – if you or your partner are a “disabled worker” (see below). If you both qualify you can have two disabled worker elements
  7. Childcare element – 70% of actual qualifying child care costs, up to maximum costs of £175 for one child and £300 for two or more children (see below for more details).

The childcare element

This is part of Working Tax Credit, as it is only available for working parents. However, it is not paid along with the rest of WTC in the wage packet, but directly by the Inland Revenue to the parent with main care of the children along with the Child Tax Credit.

Who can claim for childcare costs?

To be able to include the childcare element in the maximum WTC, you must be EITHER:

  • a lone parent engaged in remunerative work, OR
    • both partners are in remunerative work, OR
    • one partner is in remunerative work and the other is “incapacitated”.

The concession that allows you to be treated as in remunerative work for claiming WTC while on maternity pay or during non-working parts of a seasonal/term-time work cycle, does not apply to the childcare element.

“Incapacitated” means a partner is receiving either: Incapacity Benefit (short-term higher or long term), Severe Disablement Allowance, Attendance Allowance, Disability Living Allowance or a Housing Benefit/Council Tax Benefit which includes a disability premium.

What costs can you claim for?

Costs can only be claimed in respect of “qualifying children” which means up until:

  • The end of the week in which occurs the 1st September immediately after the child’s 15th birthday
  • The end of the week in which occurs the 1st September immediately after the child’s 16th birthday, if the child is counted as disabled (i.e. meets the conditions for the disabled child element of CTC)

 The childcare must be provided EITHER:

  • by persons required to register under section 10A of the Children Act (e.g. childminders), OR
  • in schools or establishments which are exempt from registration
  • by a school on school premises or by a local authority (e.g. an out-of-hours or holiday playscheme) – but only for children from age 8 to the 1st Monday in September after their 12th birthday, OR
  • by a childcare provider approved by an accredited organisation within the Tax Credit (New Category of Child Care Provider) Regulation, OR
  • by a childcare provider approved in accordance by the National Assembly, Scottish Parliament or Department of Health.

The maximum amount of WTC childcare element is 70% of the eligible costs, up to maximum costs of £175 for one child and £300 for two or more children. The amount is based on the average weekly costs over the year. You must notify the Inland Revenue if childcare costs rise or fall by more than £10 a week. The childcare element will then be recalculated.

Will I get Maximum WTC?

That depends on the income test, which is applied to both WTC and CTC.

Page Details

Last Updated: 29.07.2008 at 17:36

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