UK tax credit 101

What is a Tax Credit?

UK tax credit is a very specific helping system which has been devised to help specifically those who are employed but they have such a low income that they would be unable to cover all their costs from their salaries. This system has a flexible payback methodology which enables everyone who have been found eligible to receive tax credit to start paying the credit back when they are really in the situation of being able to do so.

What Tax credits can we differentiate?

As of now there are 3 different tax credits, but this will change this year’s spring. The Working tax credit is the most generic sort of tax credit currently received by millions in the area of the United Kingdom. The nature of this credit makes it possible for a much larger amount of people to apply for it. The other type of tax credit is the Child Tax credit which can be obtained by those who are legally responsible for one or more children. The third sort of credit is the Universal Credit which is not fully part of the current tax credit system but which will become the key credit provider from April 2017. The transition will include several changes which are not yet communicated by the British Government, therefore stay tuned to the official governmental website to learn about all the changes in time.

Who can apply?

Anyone can apply to receive this credit if they can prove that their legal income is under a pre-specified amount of money. The amount of work per week is up to 30 hours as a minimum for those who apply being single. Those who apply and have children have to have a minimum working hours of 16/week.

What is necessary to apply?

You will need your last year’s tax documents, even if the sum you made last year is above the sum which would make you applicable to receive a tax credit given that you have any paper from your employer to prove that your current income will make you applicable to receive the tax credit. The other important thing is to apply in time because the application period is very long. This is also true for those who wish to extend their tax credit to another 12 month period.

Can I apply if I receive other benefits?

This really depends on the nature of the other benefit an applicant already receives. What can generally be said as of now is that those applicants who are already in the Universal Credit program cannot apply for the current Working tax credit.

When and how does the payback start?

The payback officially starts from the moment the applicant starts to receive the credit but the full payback is generally due when the credit tax period is over. That’s when an applicant can make further modifications, extend their credit or make a deal of paying back the credit partially every month until the payback is over.

Learn more about UK tax credits by visiting the official Tax Credit website or by calling the tax credits helpline number.