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Credit Crunch - Do you qualify for a Tax Credit Protective Claims

15th June 2009

Working and Child Tax Credits

You may not be aware but these are benefits that can be claimed against tax. Although this may only apply to some, it is worthwhile circulating this information amongst family and friends as there could be many more people this would be of interest to.

Working Tax Credit

Working Tax Credit is paid to single people who work at least 30 hours a week, and to parents and disabled workers who work at least 16 hours per week, but in both cases the total family income must be below a qualifying threshold.

Do be careful if you are making a claim as a single person, when you later become part of a couple, as you must tell the Taxman when this happens. The Taxman requires couples (mixed or single sex) to make Tax Credit claims as a couple, and will demand repayment of Tax Credits paid to individuals who make an invalid single-person claim.

Income Threshold

For a single childless person aged at least 25, the qualifying income threshold is currently £13,250 per year. For a family with children the qualifying threshold is considerably higher, up to around £80,000 in certain extreme cases, although the exact amount would depend on the family's circumstances. Child Tax Credit is paid alongside Working Tax Credit and is assessed on the same claim form.

The income that counts towards the qualifying threshold is the family's income spread out over the full tax year. If the family income suddenly drops part way through the tax year, due to redundancy or business failure, which is far more likely in the credit crunch, the family's average income for the tax year may well be below the qualifying threshold.

HMRC encourages you to claim for a benefit you may not yet qualify for

The family or individual must make a Tax Credit claim before 6 July 2009 to allow the claim to be back-dated to the beginning of the current tax year (2009/10). Although the claim may initially give rise to a nil payment based on income received in 2008/09, the claim for 2009/10 can be amended later to take account of the reduced income for 2009/10. At that point payments will be made based on the total family income averaged out over the tax year.

How to claim

To claim tax credits you have to fill in a claim form. You can order a tax credits claim pack from the Tax Credit Helpline on Tel 0845 300 3900 or textphone 0845 300 3909. The helpline is open from 8.00 am to 8.00 pm every day

If you feel your family income may be at risk in the current unstable economic climate, it may make sense to submit a protective Tax Credit claim before 6 July 2009.

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