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The Working Tax Credit (WTC) and Child Tax Credit (CTC)
came into force in April 2003, and they replace the Working
Families Tax Credit (WFTC), Children's Tax Credit and the child
allowance within Income Support and Job Seekers'
Allowance.
Working Tax Credit (WTC)
The WTC supports working households on low incomes by topping up
earnings. It includes an element specifically to help with the cost
of childcare.
Who can apply?
Claimants must have one or more child aged 0-16 (or 16-18 in
full time education), and work at least 16 hours per week, or be 25
or over and work at least 30 hours per week (unless they have a
disability).
How to apply
Applications forms are available from your local tax office,
library, job centre, or Citizens' Advice Bureau, or by calling -
Tax Credits Helpline: 0845 300 3900.
The Tax Credits Helpline
The Tax Credits Helpline can advise you on whether or not you
are eligible for WTC and/or CTC, and can help you complete the form
if you are unsure. If you have internet access, you can check your
eligibility and apply online by visiting the
Inland Revenue website (link opens in a new
window).
There is further help for lone parents at local job centres. A
lone parent advisor will be able to confirm how much the parent is
eligible for, and will help to complete and 'fast-track' the forms.
If a parent is unable to pay childcare fees in advance, the lone
parent advisor can, at their discretion, arrange for the first
payment to be advanced to the provider in anticipation of receiving
the tax credit from the Inland Revenue.
How is the WTC made up?
There is a weekly allowance for each of the following
elements:
- Basic element - for any working person meeting the
criteria.
- Lone parent element - for lone parents.
- Couples element - for couples.
- 30 hour element - for people who work at least 30 hours per
week. (Couples with at least one child can claim the 30 hour
element if they work 30 hours or more per week between them).
- Disability element - for working people with a disability.
- Severe disability element - for people with a severe
disability.
- 50 plus element - for people aged 50 or over who have just
returned to work after a period on benefit.
- Childcare element - for working families who pay for
childcare.
- The childcare element The childcare element of the WTC is
payable if both parents are working 16 hours per week (unless one
is receiving disability benefit), and are paying fees for 'approved
childcare'.
Approved childcare can be any of the following:
- A nursery, playgroup or pre-school setting registered with
Ofsted.
- A registered childminder.
- An out of school club on school premises run by a school or
Local Authority.
- An unregistered provision catering for the over eight age
range, which is accredited under a recognised quality assurance
scheme a home childcarer registered by Ofsted.
Up to 70% of childcare costs are payable, up to a maximum of
£135 per week for one child (i.e. @ 70% = £94.50) and £200 for two
or more children (i.e. @ 70% = £140).
The total amount of WTC payable is based upon household income,
so the more you earn the less you can claim. Households earning up
to £34,000 a year, with two or more children, and paying £200 per
week or more in childcare fees, will be able to claim WTC.
How is it paid?
The main part of the WTC is paid to the individual or nominated
partner of a couple through the payroll. Self-employed claimants
are paid directly by the Inland Revenue.The childcare element of
the WTC is payable directly from the Inland Revenue to the parent
or carer who is mainly responsible for caring for the children in
the household.
The Child Tax Credit
The CTC is a system for supporting families with children,
whether they are in work or not.
Who can apply?
Claimants must have one or more child aged 0-16 (or 16-18 in
full time education), and can be either lone parents or
couples.
How is the CTC made up?
There is a weekly allowance for each of the following
elements:
- Family element - for eligible families.
- Family element, baby addition - supplement for families with a
child under one year old.
- Child element - a sum for each child you are responsible
for.
- Disability element - a sum for each disabled child.
- Severe disability element - a sum for each severely disabled
child.
The total amount payable is based upon household income, so the
more you earn the less you can claim. Households with children,
with an income of up to £58,000 a year will be able to claim
CTC.
The CTC is payable directly from the Inland Revenue to the
parent or carer who is mainly responsible for caring for the
children in the household, along with any 'childcare element' of
the WTC.
Applicants Responsibilities
Applicants are responsible for notifying the Inland Revenue:
- If they have changed from being a single person to a couple or
vice versa.
- Of any falls or rises in average weekly childcare costs, of
more than £10 per week.
- If fees from 'eligible childcare' are no longer being
incurred.
- Of any significant changes in income.
- Of any significant changes in working hours.
- Of any changes to the number of dependent children living in
the family home.
- Of any other change to circumstances affecting entitlement to
the credits.
If an applicant fails to notify the Inland Revenue within three
months, of any changes which reduce the amount of credit he/she is
entitled, then he/she may be liable to a penalty.
Provider's Responsibilities
Unlike the WFTC, providers are not responsible for signing
application forms. The onus is on the applicant to provide accurate
information to the Inland Revenue, and to notify them of changes.
Failure to do so may result in a fine. The only information
required of the provider is the OFSTED registration number, which
the applicant must enter on the form. This will enable the Inland
Revenue to spot check applications for the childcare element of the
WTC. |