Working tax credit

Basic conditions

To qualify for working tax credit you must meet the basic conditions. You must:

• Be aged 16 or over,
• Be in the UK,
• Not be subject to immigration control, and
• work a certain number of hours each week in paid work. The required number of hours of work varies depending on the your age and household circumstances (see below).

Number of hours of paid work

The work done must be employed or self-employed and it must be paid work. The number of hours you must work depends on your circumstances:

Single claims

• the claimant is aged 16 or over and works at least 16 hours a week and: is responsible for a child or qualifying young person; or
• qualifies for the disability element of WTC; or
• the claimant is aged 60 or over and works at least 16 hours a week; or
• the claimant is aged 25 or over and works at least 30 hours a week.

Joint claims, with no responsibility for a child or qualifying young person

• the claimant is aged 16 or over and works at least 16 hours a week and qualifies for the disability element of WTC; or
• the claimant is aged 60 or over and works at least 16 hours a week; or
• the claimant is aged 25 or over and works at least 30 hours a week.

Joint claims, with responsibility for a child or qualifying young person

• the claimant is aged 16 or over and works at least 16 hours a week and qualifies for the disability element of WTC; or
• the claimant is aged at least 16 and is a member of a couple where one partner works at least 16 hours a week and the total number of hours for which the couple work is not less than 24 hours a week; or
• the claimant is aged at least 16 and is a member of a couple where one partner works at least 16 hours a week and the other partner is incapacitated, in prison, in hospital or entitled to carer’s allowance or carer’s assistance (Scotland); or
• the claimant is aged 60 or over and works at least 16 hours a week.

Changes to hours of work

You must report any changes to your normal working hours where the change means you go over or under the relevant number of hours you are required to work. This is because your award may change, it may reduce or stop or it may increase if you start to work 30 hours a week or more. Ideally, HMRC say you should report any changes to your hours of paid work even if the change doesn’t affect your award as it helps them keep their records up to date. There is some information on our website for advisers which explains how temporary changes to hours are treated for working tax credit.

Apprenticeships and working tax credit

HMRC say that the hours you work as an apprentice will count as remunerative work for WTC purposes if:

• you have a contract of employment for your apprenticeship.
• you are attending a scheme (apprenticeship) where your payment is classed as earnings (as opposed to reimbursement of expenses) and subject to income tax and National Insurance contributions.

But, if you only receive a non-taxable training allowance, monies in connection with participating in the Intensive Activity Period (part of jobseekers’ allowance schemes), a sports award or no money other than tax-exempt discretionary payments, your apprenticeship working hours will not be classed as being in remunerative work.

This means that if you have a contract of employment and your pay is classed as taxable earnings, not just reimbursement of expenses or a non-taxable training allowance, it should be classed as paid (remunerative) work for working tax credit.

Students and working tax credit

Students can get working tax credit if they meet the usual qualifying rules. To get working tax credit students will need to do paid work in addition to their studies. Any time spent working which is part of the studies will not count as remunerative work.

The main rules around income can be found in our tax credit income section and in addition, Adult Dependants' Grant, or any dependants' grant for students in Scotland, needs to be declared in full.

Scholarships or bursaries do not need to be declared as income.

Carers and working tax credit

Work done as a carer will count as paid (remunerative) work for working tax credit if it is paid under a contract of employment as an employee or if it paid self-employed care services.

Qualifying care receipts paid by local authorities and similar agencies are only taken into account in working out tax credit income to the extent that they are taxable. Therefore, if you use the qualifying care relief simplified method for working out your profits for income tax self assessment, your income from caring for tax credits purposes will be the amount on which you pay income tax. If your care receipts are wholly covered by the qualifying care relief exemption, then none of your income from caring is counted in assessing your tax credits entitlement.

Also, if you use the standard method, your caring income for tax credits will be the same as your taxable profits after deductions.

Working tax credit elements

The amount of a working tax credit award payable depends on which elements the claimant is entitled to, the household taxable income (either for the current year or previous year) and whether an overpayment is being deducted.

The following elements make up a working tax credit award if the conditions for each are met:

Basic element

This basic element is always included in all working tax credit awards if the basic hours conditions are met.

Lone parent element

This element is included in working tax credit awards for lone parents.

Couple element (Second adult element)

This element is included for couples making a joint claim (although some couples may not qualify for the second adult element where one partner is subject to immigration control)

Disability element

This element is included if 3 conditions are met: working at least 16 hours a week, have a disability which puts you at a disadvantage in getting a job and you are receiving or have recently received a qualifying benefit. For a couple, if you both qualify, two disability elements are included

Severe disability element

If you receive the highest rate of disability living allowance (DLA), armed forces independence payment (AFIP), the enhanced rate daily living component of personal independence payment (PIP), higher rate attendance allowance (AA), the enhanced  rate daily living component of the Adult Disability Payment under Scottish disability assistance or they have reached their state pension age and receive the higher rate of Scottish disability assistance.

In a joint claim, the person who qualifies for this element does not need to be working to get the severe disability element of working tax credit. In a joint claim if both claimants qualify two of these elements are added.

30 hour element

This element is included if you work at least 30 hours a week. Couples with children can combine their hours to meet the threshold to qualify for the 30-hour element, as long as one partner is working at least 16 hours a week. Only one element is paid even if both work 30 hours.

Childcare element

This element is to help with the cost of qualifying childcare. Not everyone qualifies and not all costs are covered. You must use a registered or approved provider. See our childcare page for more information.

Things to note about working tax credit

Working tax credit can still be paid where you are off work because you are sick or on maternity, shared parental or adoption leave or parental bereavement leave. Other temporary absences from work may also be covered.

It is the hours you normally work that count for working tax credit. This may not be the same as your contracted hours, for example if regular overtime is worked.

If you are a term-time worker, your working tax credit claim should be based on the hours you work during term-time. Payment continues over the school holidays. However, if you are a seasonal worker who only works a few months each year you may not be entitled to working tax credit for the periods you do not work.

HMRC treat foster carers and shared lives carers as self-employed for tax credits so your work as a foster carer or shared lives carer can count as paid work for working tax credit.

If you are self-employed, HMRC say not only the hours costed to clients/customers should be included but also time spent on other ‘business’ tasks e.g. trips to wholesalers, book-keeping, advertising, travel. All hours worked must be for payment or in expectation of payment. To claim working tax credit as a self-employed person, you have to show that you are:

• Engaged in carrying on a trade, profession or vocation on a commercial basis
• This must be with a view to realisation of profit
• The work must be organised and regular

If your normal working hours change, your working tax credit payments may also change and if the change affects your award, you must tell HMRC within one month of the change. If you stop work altogether or your hours drop below the threshold for your working tax credit award, you may get what is called a ‘working tax credit run on’ for four weeks. This means you should continue to get working tax credit, even if you would no longer qualify, including all of the elements you were previously getting. If you find a new job or increase your hours again within that four-week period, your entitlement to working tax credit should continue.