Working Tax Credit is a means-tested benefit for individuals who are working but need financial support due to a low income. Through this blog post, we aim to learn how much an individual can earn in order to get Working Tax Credit. For a deeper understanding of the topic, we will also explore the eligibility criteria, scale of expected payment and consequences of overpayments for Working Tax Credit.

How Much Can You Earn To Get Working Tax Credit?

There is no set limit on the earnings that you (and your partner) make to get Working Tax Credit. However, claimants who have children, are single parents or are challenged with a disability will be able to claim ahigher amount.

If you want to claim Working Tax Credit, you should be able to meet the eligibility criteria by fulfilling the below-listed conditions:

  • you must be in paid work for at least 4 weeks 
  • you should be working a certain number of hours; according to your age
  • you must be claiming Child Tax Credit

However, one must keep note that paid work does not include money earned from the following sources:

  • a Rent Room Scheme 
  • work done in prison
  • grant for training or studying
  • sports awards 

The number of hours one must work in order to claim Working Tax Credit is classified on the basis of age as follows:

  • If you are aged between 25 to 59 years, you should be working at least 30 hours per week
  • If you are aged 60 years or above, you should be working at least 16 hours per week
  • If you are disabled, you should be working at least 16 hours per week
  • If you are single and responsible for a child, you should be working at least 16 hours per week
  • If you are part of a couple and are responsible for a child, there should be at least 24 working hours between you, with one of you working at least 16 hours per week

If you are unable to claim Working Tax Credit due to lack of eligibility, you can apply for Universal Credit or Pension Credit (this will apply only f you and your partner are above state pension age). 

How Much Can You Claim In Working Tax Credit?

The amount that one can claim in Working Tax Credit depends on the following factors:

  • your circumstances
  • your income

The basic rate is set at £2,070 a year and there are elements that be added on top of this amount. These are classified on the basis of your circumstances as follows:

  • Couples applying together can get up to £2,125 a year
  • Single parents can get up to £2,125 a year
  • Individuals working at least 30 hours a week can get up to £860 a year
  • Individuals with a disability can get up to £3,345 a year
  • Individuals with a severe disability can get up to £1,445 a year on top of the disability payment
  • Individuals who pay for approved childcare can get up to £122.50 for 1 child or £210 for 2 or more children a week

What Happens If You Have Overpaid Working Tax Credit?

If you have been overpaid tax credits by the HMRC, they will inform you of the amount that is due from your end and the mode of repayment. However, how you repay an overpayment of tax credits to HMRC depends on the following factors:

  • you still get tax credit payments
  • you are claiming Universal Credit
  • you are receiving neither tax credit nor Universal Credit

If you still get tax credits, HMRC will simply reduce your tax credits to account for the overpayment. The amount that is reduced each month will depend on how much you receive from them and your household income. 

How Can You Repay Overpaid Working Tax Credit?

Tax credit overpayments can be repaid in any of the following ways:

  • Direct debit
  • Online and telephone banking
  • At your bank or building society
  • By cheque through postal service

If you are claiming Universal Credit and have overpaid tax credits, your future payments will be reduced by the HMRC until your dues are cleared.

If you receive neither tax credits nor Universal Credit, you will be sent a “notice to pay” by HMRC which you must pay within 30 days. 

What Happens If You Cannot Afford To Repay Overpaid Tax Credit?

If you cannot afford to repay your overpaid tax credits due to financial hardship, you should write an application to HMRC. They usually consider such situations and reduce the amount that is deducted each month (this may increase the number of your instalments while giving you a monthly relief.

You can request HMRC for the following if you are unable to repay overpaid tax credits as per their schedule of deductions:

  • how much do you have to pay back in each instalment
  • how long do you have to pay the money back
  • the way you pay the money back

If you are getting pension income or are in PAYE employment, the HMRC can readjust your tax code to recover overpaid tax credits as well. The amount that is recovered and deducted each month will depend on your monthly income.

Conclusion:

The content of this article has shared the details of the eligibility criteria for the Working Tax Credit; especially laying emphasis on the role of one’s consequences and income. However, if you have any more questions regarding Working Tax Credits, you post your queries to the HMRC digital assistant.

FAQs: How Much Can You Earn To Get Working Tax Credit?

Why did I not get my Working Tax Credit?

If you didn’t get your Working Tax Credit, it may be because you have not submitted your annual review or you have not reported a change in your circumstances.

Is Working Tax Credit means-tested?

Yes, Working Tax Credit is a means-tested benefit for individuals who are working but need financial support due to a low income. 

How many hours do you have to work to get Working Tax Credit?

The number of hours that you need to work to claim Working Tax Credit depends on your age. For instance, if you are aged 25 to 59 years, you should be working at least 30 hours per week to claim the benefit.

Can tax credit overpayments be written off?

Tax credit overpayments are rarely written off, even though HMRC can consider an individual’s application to reduce the total amount to be paid or ease in instalments due to financial hardship. In the rare case that HMRC does release a person from overpaid tax credit debt, it is termed a remission.

How long do I have to pay back a tax credit overpayment?

Individuals are usually assigned a 30-day time limit to start repaying their overpaid tax credit. The amount of time it takes to complete their repayment will depend on the amount due and the monthly instalment that is due. Should they be unable to meet this deadline, they must inform the Department for Work and Pension.

References:

Paying back a working or child tax credits overpayment – Citizens Advice

Working Tax Credit: Eligibility – GOV.UK

Discussion: Daily tax credit rates 22/23 – Rightsnet

Tax credits overpayments: If you cannot afford your repayments – GOV.UK

How to repay your tax credits – GOV.UK

Working Tax Credit: What you’ll get – GOV.UK

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