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What are Tax
Credits?
Two types of tax credits exist: Child Tax credit and Working
Tax Credit. You will usually qualify for tax credits once you
reach the age of 16 and if you reside in the United Kingdom.
However, there are certain instances where you can qualify even
if you do not live in the UK. For this happen, you need to be
one of the following:
1. A citizen of a country that belongs to the European Economic
Area (EEA) and you work in the United Kingdom, or
2. A Crown Servant posted overseas, or
3. A citizen of a country in the EEA living abroad and
receiving a UK state pension or contributions-based Jobseeker’s
allowance.
Couples are obliged to make a joint tax credits claim. Child
Tax Credit is given to the person responsible for the caring of
the child or children. This person needs to be responsible for
at least one child or young person who qualifies. Single
parents are also able to receive a payment.
Workers who pay UK National Insurance Contributions while on
assignment in another EEA country may receive Child Tax
Credit.
Anyone who is working will qualify for Working Tax Credit, even
self-employed people. It matters not if they are in a
partnership or on their own. As long as someone
1. works for a minimum of 16 hours a week
2. gets paid for that work, and
3. reasonably expects to remain in the position for a further 4
weeks they will be able to obtain Workers Tax Credit.
Furthermore, someone who
1. is aged 16 or over and who is responsible for at least one
child, or
2. is aged 16 or over and who is disabled, or
3. is aged 25 or over and is in employment for a minimum of 30
hours a week will qualify for Workers Tax Credit.
Couples should decide who would be the recipient of the Working
Tax Credit if both of them work more than the minimum of 16
hours a week. It may seem obvious but it is often necessary to
point out that Working Tax Credit is meant for people who are
working. A part of Working Tax Credit is geared towards
assisting with the cost of childcare. The childcare part of
Working Tax Credit, alongside payments of Child Tax Credit, is
paid into the bank account of the person responsible for the
caring of the child or children.
Your annual income will determine the amount of tax credits you
qualify for.
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