Tax Credits Changes

The government has made major changes to tax credits with effect from 6 April 2012.

Previously, you could usually get some form of Child Tax Credit (CTC) if your income was below the limit of £41,300.  From 6 April 2012 the income limit depends on individual circumstances, but as a rough guide CTC will not be payable if:

·         you have one child, and your annual income is more than around £26,000;

·         you have two children, and your annual income is more than around £32,200.

You could still qualify for CTC if your income is above these amounts.  For example, if you pay for registered or approved childcare, have more than one or two children,  are disabled, or your child has a disability.

Also with effect from 6 April 2012 there are new working hours rules for Working Tax Credits purposes for couples with children:

·         if you both work, your joint weekly hours must be at least 24, with one of you working at least 16 hours a week;

·          if only one of you works, that person must be working at least 24 hours a week.

In addition, there have been changes to how far payments can be backdated. From 6 April 2012, payments can only be backdated by up to one month, down from three months.  A protective claim for tax credits should be considered, particularly for self employed individuals with fluctuating profits.  Please be aware that any such claim needs to be made on an annual basis.

For further advice on tax credits please contact Ward Williams: www.wardwilliams.co.uk