Working Tax Credit in 2022: everything you need to know

What is Working Tax Credit? How may I earn it? How much could I get. If you are employed and receive Child Tax Credit, you could be eligible. This Your Benefits article will tell you everything that you need to know. 

What is working tax credit

Working Tax Credit is a benefit for those who already receive Child Tax Credit. Indeed, if you do not, you may instead make an application for Universal Credit. Additionally, you and your partner may be older than State Pension age. If this is the case, you could earn Pension Credit.

Working tax credit entitlement

As said previously, you may only earn this benefit if you already receive Child Tax Credit. Additionally, how much you receive will depend on a couple of factors. Mainly, on your circumstances and your age. Then, these will in turn dictate how many hours you must work in order to be eligible.

More specifically, here are how many hours you must be working depending on your circumstances, to earn Working Tax Credit:

• 30 hours or more weekly (this is if you are between 25 and 59 years old);
• 16 hours or more weekly (this is if you are : 60 years or older, disabled, or single with 1 child or more);
• 24 hours or more weekly (combined with your partner) (this is if you are a couple with 1 child or more, and one of you must work at least 16 hours weekly).

You may be on leave. This does not void your eligibility for Working Tax Credit. 

Are there exceptions for couples with one child or more?

You may be in a couple. If this is the case, and you work less than 24 hours weekly combined, you may still be eligible. Indeed, one of the following needs to be true for your situation:

• You work 16 hours weekly or less and your partner is incapacitated and getting benefits because of ill health or a disability;
• You work 16 hours weekly or less, and you are either 60 years or older or disabled.

What can be counted as work?

Your work can be as an employee or a worker, or the work of a self-employed person. Additionally, you could be doing a bit of both and be eligible for Working Tax Credit. 

Not everyone who is self-employed qualifies for this benefit. Indeed, your self-employment must at least intend to make a profit, if it does not already do so. Additionally, it must be regular, organized and commercial. As such, you must be doing all do the following to qualify:

• Work at a regular pace;
• Intend to or already make a profit;
• Have records of your business’ activity (this includes (but is not limited to) invoices and receipts);
• Adhere to your work’s regulation (if required, you must have the appropriate insurance or license).

The average hourly profit that your self-employed work generates might be below the National Minimum Wage. If this is the case, you will have to provide the following information to HM Revenue and Customs:

• Details on the daily tasks and activities of your business;
• Your business plan;
• Business record;
• Proof that you have been promoting your business (for example, this can be flyers, or physical or online advertisement).

How do you get working tax credit?

You may only claim Working Tax Credit if you already receive Child Tax Credit. If this is the case, you may apply by indicating this in your current tax credit claim. You may do so by reporting a change in circumstance to HM Revenue and Customs (HMRC). Then, tell them you are eligible for Working Tax Credit.

You may not receive Child Tax Credit, but be otherwise eligible. Do not worry. Instead, you may apply for Universal Credit. Moreover, both you and your partner may be State Pension age or older. In this case, you could qualify for Pension Credit. 

How much is working tax credit?

There are 2 different parts to Working Tax Credit. The first is the basic amount. Then are extra amounts. They are called ‘elements’. Your income and circumstances impact these amounts.

Below is a table that indicates how much you may earn extra with ‘elements’:

If your income or circumstances change, it might impact your payments. More specifically, they could increase or decrease. 

This benefit is paid the same way as most other benefits. Indeed, you will receive money directly into your building society or bank account. The payments will come weekly, or every 4 weeks. You may be a couple. In this case, you will need to chose one account that will receive the money. 

You will typically be paid until the end of the tax year that you applied. The date for this is 5 April. For example, if you applied in January 2022, you will be able to receive payments until 5 April 2022. 

Working tax credit income requirements

First, the work that you partake in must last a minimum of 4 weeks. Additionally, it needs to pay you. The payment can be in kind. If you have not yet worked for 4 weeks or been paid, but are expected to, you still qualify. 

However, there are way in which money that is paid does not allow you to be eligible. More specifically, money paid:

• As part of an award for sports;
• For prison done while being incarcerated;
• As part of a studying or training grant;
• As part of a ‘Rent a Room scheme’ (the amount must be below £7,500. If you are a joint owner, the amount must be below £3,750).

As for your income, it all depends on your circumstances. For example, if you are a couple but don’t have children, your income may not exceed £18,000. However, if you are single with no children, your income may not be over £13,100.

Gaps in my employment record

You may still receive Working Tax Credit in periods during which you are not working. More specifically, if you are in between jobs, receive sick pay, or on maternity leave, for example. If you qualify, then you will be eligible for a set amount of time. They are as follows. If you are:

• Leaving your job (or lost it) (4 weeks ago);
• On maternity or adoption leave (the first 39 weeks);
• On paternity leave (the complete duration of your ordinary paternity leave);
• On additional paternity leave (up to the 39th week, if your partner is also taking the same amount of leave);
• Sick and off work (the first 28 weeks);
• Currently on strike (the first 10 days);
• Laid off (either 4 weeks following the date you are laid of, or 4 weeks following when the lay off becomes indefinite);
• Suspended from work (this can be because someone complained about you. Then, the set period is typically the period of the suspension).

You may then not return to work. If this is the case, you must notify HM Revenue and Customs.

How can I get Working Tax Credit if I am unemployed?

As said above, you may earn Working Tax Credit while not currently being at work. However, a couple of things needs to apply. Mainly, you must be or have been one of the following:

• Doing paid work;
• Worked the correct number of hours before your gap or leave took place;
• Earned Statutory Sick Pay or a similar benefit while being on sick leave.

What counts as a benefit similar to Statutory Sick Pay? They are the following:

• National Insurance (the ‘incapacity for work’ element)
• Either Employment and Support Allowance (ESA) or Income Support (the ‘incapacity for work’ element).

What is Universal Credit? 

You could apply for Universal Credit if you do not receive Child Tax Credit. Indeed, it is a benefit that could help you in covering living costs. It is paid monthly, directly into your bank account. 

The reason that you are likely eligible (if not earning Child Tax Credit) is because Universal Credit is replacing a number of benefits. More specifically, it is replacing the following:

• Working Tax Credit;
• Income-based Jobseeker’s Allowance (JSA);
• Income Support;
• Income-related Employment and Support Allowance (ESA);
• Housing Benefit;
• Child Tax Credit.