There are two main tax credits - Child Tax Credit and Working Tax Credit
Child Tax Credit
The Child Tax credit is available to anybody with children under 20 (if still in certain full time education) and residing with them, but is income related. The income limit before it is totally withdrawn depends upon the number of children you have eg 1 child income limit is £26188 and 2 children £32968. This allowance is enhanced for low to average earners if they have more than one child and further enhancements occur if any children are registered disabled. Low earners may qualify for Working Tax Credit in addition to Child Tax Credit (see below). Child Tax Credit is now restricted to a maximum of two children unless it has been received for more children previously.
Working Tax Credit
Working Tax Credit is for low paid earners. If the income is below approximately £13,176.00 for a single person and £18,078 for a married couple some eligibility for Working Tax Credit will occur.
Both these Tax Credits are now paid direct into your nominated bank account. As both of these Tax Credits have been in force since 6 April 2003, many of you will already be in receipt of these payments. For those of you who feel that you may qualify and have not applied this can only be backdated for up to 1 month. If you need to apply, call the Revenue helpline, telephone number 0845 300 3900, or you may wish to complete the application form over the Internet by visiting the Revenue website at www.taxcredits.hmrc.gov.uk
For those who been in receipt of Tax Credits, you will be aware that there is an annual review form to complete. We will supply the correct figures for the purpose free of charge and even assist in filling in the form if required. Again, these figures can be submitted on the review form itself, by telephoning the helpline or online , details for both are as above.
The most common mistake we have found when people have completed the Tax Credit forms themselves is that they over declare their income.
There are many legitimate deductions to be made gross salary before coming up with the relevant earned income, for example, for Church of England clergy typical deductions will be their tax free hlc allowances, allowable deficit of clerical expenses, gross Gift Aid and gross pension payments. Obviously , these latter two deductions are applicable to any individual as well. As already stated for our registered clients, we happy to advise on the correct relevant figures free of charges.