Uk Tax credit – definition of incomes

When it comes to applying for a tax credit there are several questions that need to be answered and of course there is a long list of conditions which need to be fulfilled in order for the applicant to be eligible to receive the Working Tax credit. One of the key questions is the question of income and what are the sums which are legally treated as incomes versus those amounts which do not count as an income.

family income spending

By the time of the application you will need to hold your tax documents of last year and the employment papers for the present year in order to be able to make the application properly. As not all the employers treat the different sorts of incomes the same way, it’s essential for the applicants to be aware what other sums may or may not have to be counted in, even if these amounts are not officially part of the salary. Let’s see the list this time around.

Types of payments which may count as official income:

The official net salary: it’s always the net salary which needs to be counted with by the time of the application.

Further employer benefits: this includes any benefits, such as food tickets, paying for monthly transportation or money for official clothes the employee receives from the employer.

Benefits provided by the state – if you receive any benefits call the tax credits helpline number to obtain further information whether or not that benefit counts in as a salary.

Pension (individual or state pension)

Bank Interests – any bank interests count as an income

Partner’s income – if you live in the same household and apply for Tax credit as a couple

Payments received for work abroad – all salaries count as an income no matter they are paid inside or outside the country.

Further types of payments to watch out for:

The list here contains incomes which may or may not count as salary when it comes to applying for a tax credit. Always check with your tax office before actually applying for a working tax credit

Keep in mind that if you fail to enclose any payments which would count as an income may even result in you having to pay a large penalty for the Tax Credit office. The sum of the penalty is up to GBP 3000 as of date.

A few words on Universal Credit

As the whole UK Tax Credit system is transitioning to become part of the Universal Credit system in the end of this year’s tax year it’s essential for all the applicants to start obtaining information as to what would change in terms of the conditions for the application. As of now, whoever has already applied to receive Universal Credit or they already receive it, they are automatically closed out from applying for Working Tax credit.
If you want to learn more about Tax Credits and the future tendencies visit the official Tax Credit website.