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Working tax credits how much can i earn

working tax credits how much can i earn

Concept

Tax credits come in two separate forms: one based on whether you work and one based on whether you have children. You may be eligible for one, both or neither payment. Tax credits come as a direct payment rather than, as the name might suggest, a reduction in your tax liabilities. The money you receive as tax credits is tax-free. Note that Child Tax Credit isn't connected with or affected by Child Benefit.

Eligibility

As a very simple and general principle, you are eligible for Working Tax Credits if you work at least 30 hours a week in a job expected to last at least four weeks. As a very simple and general principle, you are eligible for Child Tax Credit if you have a child aged under 16, or a child aged under 20 in approved education of training. Both tax credits have more detailed rules than this, taking into account factors such as your age and whether you are disabled; the government offers online questionnaires (see Resources) to check eligibility. Remember that even if you meet the eligibility criteria, you'll only actually receive any money if your income is below a certain level.

Payment amounts

As of January 2013, the basic rate of Working Tax Credit is £1,920; the figures vary depending on your age, whether you have a disability, and whether you are part of

a couple or are a lone parent. You can also claim an additional Working Tax Credit payment to pay some of the costs of childcare that allow you to work. As of January 2013 the basic rate of Child Tax Credit is a flat £545 per year plus £2,690 for each child; you may get a higher rate if you have a disabled child.

Income thresholds

As of January 2013, the income threshold is £6,420 a year if you are eligible for Working Tax Credit, or if you are eligible for both Working Tax Credit and Child Tax Credit. If you are eligible only for Child Tax Credit, the income threshold is £15,860. If you earn less than the relevant threshold, you receive the full payment amount. If you earn more than the threshold, your payment amount is reduced at a 41 percent rate. For example, if you earn £100 more than the threshold, your payment amount is reduced by £41. Once you reach a certain income level your payment amount will have been reduced to zero this way and thus you won't get any money. As a general guide, this income level is around £13,000 for single people without children, £18,000 if you are in a childless couple, £26,000 if you have one child and £32,000 if you have two children; remember that the actual figures will depend on your circumstances.

Source: www.ehow.co.uk
Category: Credit

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