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Claiming Tax Credits And Benefits – Part 2: Working Tax Credits

June 4, 2014

Posted by Simon Misiewicz on 4th June 2014

Are you worried about money as a property investor?

Would you like to claim tax credits and benefits to boost your income?

The Diagnosis

Tax and money issues need to be diagnosed in order to be understood for a remedy to be implemented.

There may come a time when one member of the household decides it best that they become a full time investor. There are a few factors that need to be worked out before that can happen. One of the major considerations is how much money can you survive on until property generates enough income to sustain the family financial needs.

We have written several articles to enable you to make more money as a property investor:

Part 1: Child tax credits

Part 2: Working tax credits

Part 3: Tax credits examples

Part 4: Maternity pay and child benefit

 

Part 2 Working tax credits

Working Tax Credit is for working people on a low income. You can be employed or self-employed, and you don’t have to have children to claim.

In all cases you have to be:

  • working (whether in employment or self-employment) when you make your claim, or
  • starting paid work within 7 days of making your claim

There are several elements to working tax credits:

TESTThe amount of your Working Tax Credit award is based on your circumstances (for example, how many hours you work or whether you are disabled) and your income. The table below provides a guide to how much (in pounds) you could get for the tax year 2014–15. (3)

If you are entitled to Working Tax Credit, whether on its own or in addition to Child Tax Credit, and your family’s annual income is below £6,420, you will get the maximum amount of all the elements that you qualify for.

If your income is over that threshold, the maximum amount is reduced by 41 pence for every pound of income (41%) over the threshold (rounded down to the nearest penny).

If you have income over the threshold of £6,420, your maximum amount will be reduced in the following order:

  • Working Tax Credit apart from the childcare element
  • the childcare element of Working Tax Credit
  • the child elements of Child Tax Credit. (1) You may get more if you have a disability or are responsible for children and have childcare costs.

You usually need to be working a minimum number of hours a week to claim Working Tax Credit.

If you are responsible for a child or qualifying young person and you are not part of a couple, you can claim Working Tax Credit if you:

  • are aged 16 or over
  • work at least 16 hours a week

If you are responsible for a child or qualifying young person and you are part of a couple, you can claim Working Tax Credit if you are both aged 16 or over and:

  • you work at least 24 hours a week between you, with one partner working at least 16 hours a week
  • one partner works at least 16 hours a week and qualifies for the disability element of Working Tax Credit

If you are not responsible for a child or qualifying young person you can claim Working Tax Credit if you or your partner are:

  • aged 25 or over and work at least 30 hours a week
  • aged 16 or over, work at least 16 hours a week and qualify for the disability element of Working Tax Credit
  • aged over 60 and work at least 16 hours a week

If you are part of a couple with children, you are eligible for the 30-hour element if you jointly work at least 30 hours a week. This is providing one of you works at least 16 hours. Couples without children cannot add their hours together to qualify for the 30-hour element.

You must expect the work to:

  • continue for at least 4 weeks after you have made the claim
  • be paid, so for example, working as a volunteer where you are not paid does not normally count

You can still claim Working Tax Credit if you work at a school or college and don’t work during school or college holidays.

You can calculate the amount of tax credits that you can claim by going to the below URL:

https://www.gov.uk/tax-credits-calculator

If you are looking for an accountant or thinking of changing your current accountant because they do not understand property investing and tax implications then please Click Here To Book an “Initial Free Consultation”.

Download our FREE Property Investors Guide, Call Us on 0115 946 1991, To Email Click Here, Follow Us on Facebook or Tweet Simon Here

Please ensure that you check out our latest webinars and courses Property Accounting & Investment Webinars

References:

A Guide To Child Tax Credit and Working Tax Credit
Working Tax Credit – Help with the Costs of Childcare
Child Tax Credit and Working Tax Credit – An Introduction
Child Tax Credit – An Overview



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Telephone: 0115 939 4606
Email: simon@optimiseaccountants.co.uk