FOOL'S EYE VIEW
The Mysteries Of The Working Tax Credit

By Jane Mack (TMFJane)
August 21, 2003

Just as you start getting used to how something works, the government goes and changes it and you have to start all over again. They've done it again with the introduction of the Working Tax Credit.

Admittedly it's supposed to have simplified the previous method of helping low income households. After all, before April 2003 we had the Working Families' Tax Credit, the Disabled Person's Tax Credit, income-based Jobseeker's Allowance etc, etc, etc. These benefits have all disappeared in a puff of smoke to be replaced by the Working Tax Credit (WTC).

Essentially, it's a top-up for people who are on a low income and in paid work, whether employed or self-employed. You can be eligible whether you're single, married or living together as if you were married and if you're in paid work for more than 16 hours a week. It's even available to people without children although couples will generally only qualify if they're earning less than about £15,000 a year and singles less than £11,000.

It's applicable to the following:

• People aged 25 or over who usually work for at least 30 hours a week or
• People aged 16 and over and responsible for at least one child or
• People aged 16 or over and disabled

Apart from the basic element available to all who qualify, there are extra elements payable if, for example, you're a single parent, if you or your partner work more than 30 hours a week, if you or your partner have a disability or if you have childcare costs. There's also an extra element for people over 50.

The tax credit is based on your annual income (for couples, your joint income). Initially, it's base on your annual income for the previous year but it can change if your actual income is more than £2,500 more than expected. It'll be paid to whoever is working although if you receive the childcare element of WTC, this element will always be paid directly to the person who is mainly responsible for caring for the child or children, alongside payments of Child Tax Credit. If you both work, it will be paid to whichever one of you was nominated to receive WTC on the claim form.

You can't receive it if you are not working and the amount you can claim on a weekly basis depends on your gross income:

Gross Weekly Income    Annual Income     Single Person     Couple 
£130                          £6,760            £28.89     £57.69
£150                          £7,800            £21.49     £50.29
£180                          £9,360            £10.39     £39.19
£200                         £10,400             £2.99     £31.79
£225                         £11,700                £0     £22.54
£250                         £13,000                £0     £13.29
£275                         £14,040                £0       4.04

There may also be other benefits if you're eligible for WTC. If your income is below a certain level there is help with health care costs such as free NHS prescriptions, NHS dental treatment and sight tests, vouchers towards the cost of glasses or contact lenses and any children may also be eligible for free school meals.

As with anything to do with government forms, you have to provide a lot of information and do a lot of form filling although it is possible to do this online. You can even find out if it's worth applying in the first place by going to the 'Do I Qualify?' section of the Inland Revenue website.

Find out more from the Inland Revenue.