Changes to tax credits are happening from 6 April 2012. These include a lower income limit for Child Tax Credit. For couples with at least one child, there are new working hours rules for Working Tax Credit. How far payments can be backdated is also changing. Find out about these and all the other changes, and how they might affect you.
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Child Tax Credit payments depend on your circumstances and income.
At the moment, you can usually get some Child Tax Credit, as long as your income is not over the limit of £41,300. From 6 April 2012, this limit will be lower for most people.
From 6 April 2012, the income limit for you will depend on your own situation. But as a very rough guide, you might not be able to get Child Tax Credit from 6 April 2012 if:
But it's important to know that:
You could still qualify from 6 April 2012 if your income is above these amounts. For example, if you pay for registered or approved childcare, are disabled, or have more than one or two children.
You can find out how your own payments may be affected by checking your award notice for 6 April 2011 to 5 April 2012.
Tax credits Budget changes - examples
At the moment, if you're responsible for at least one child and working at least 16 hours a week, you can get Working Tax Credit.
From 6 April 2012, the rules for couples with at least one child are changing. In most cases, to qualify for Working Tax Credit your joint working hours will need to be at least 24 a week.
This will mean:
If neither of these apply, your Working Tax Credit will stop from 6 April 2012. But there are some exceptions to the new rules - see the sections listed just below.
You can increase the hours you work, so you would still be entitled to Working Tax Credit.
Tax credits Budget changes - examples
You'll still qualify for Working Tax Credit as long as the person who's 60 or over works at least 16 hours a week.
You'll still qualify for Working Tax Credit if both of the following apply to the disabled person:
You'll still qualify for Working Tax Credit if one of you works 16 hours or more, and the other is:
If your annual income for the current tax year is lower than last year, you may get extra tax credits for the current year. A tax year runs from 6 April one year to 5 April the next.
The lower your income, the more tax credits you can get. But from 6 April 2012, when your income goes down it might not affect your payments until the following year.
You should always tell the Tax Credit Office your new lower income, to help make sure you get what you’re entitled to.
Your payments won’t change for the current tax year - if all your other circumstances stay the same. But the Tax Credit Office will use your new income figure to work out what to pay you for the following tax year.
Tax credits Budget changes - examples
The Tax Credit Office will re-work your tax credits. But they will ignore the first £2,500 of the reduction. They will take the full amount of the reduction into account when they work out what to pay you for the following tax year.
Tax credits Budget changes - examples
At the moment, the Tax Credit Office can pay tax credits for up to three months before the date they get your claim form. This is known as 'backdating' your claim.
From 6 April 2012, this period reduces to one month. If the Tax Credit Office receives your claim on or after 6 April 2012, they'll only be able to backdate it up to one month.
This change means you could lose money if you delay claiming. For example if you have a baby on 1 June, but your claim's not received until 1 August, your payments will only start from 1 July. You'll lose out on a month's payment.
At the moment, if a change means your payments go up, you'll usually get the higher amount backdated for up to three months.
From 6 April 2012, this period reduces to one month. If you report a change that means your payments go up, the higher amount will only be backdated by up to one month.
To make sure you get your higher payments backdated to the earliest possible date, you should report all changes within one month.
Tax credits Budget changes - examples
If you're getting the extra amount of Working Tax Credit, called the '50-plus element', this stops from 6 April 2012.
This means your payments could go down from 6 April 2012.
This change also means your Working Tax Credit could stop altogether, unless you're working a certain number of hours. This is explained in the next section.
Tax credits Budget changes - examples
If you're getting the extra '50-plus element', you only need to work at least 16 hours a week to qualify for Working Tax Credit.
When the 50-plus element stops from 6 April 2012, if you're not working a certain number of hours your payments may stop altogether. You can increase the hours you work, so you would still be entitled to Working Tax Credit.
From 6 April 2012, you'll need to be working the following hours to qualify for Working Tax Credit.
You - or your partner if you've got one - will need to work at least:
You'll still qualify for Working Tax Credit if either of the following applies:
There will be changes to some of the tax credits rates (or 'elements'). One of these is that the maximum amount of the child element of Child Tax Credit will go up from £2,555 to £2,690.
Follow the link below to find out what the new tax credits rates will be.
How your tax credits entitlement is worked out
Checking your tax credits award notice
Tax credits: changes you need to report and when
