What are Working Tax Credit and Child Tax Credit?
Working Tax Credit is essentially a form of benefit paid by the government to people who work at least 16 hours per week (24 hours between them with one working at least 16 hours in the case of couples), who have a low income. Income Support is paid to those on a low income who work fewer than 16 hours per week.
Child Tax Credit is calculated and administered with Working Tax Credit and is paid to people whose income is low and who also have children of school age (or younger) or are under 20 and in full-time (state-funded) education.
What effect will my business have on my entitlement to Tax Credits?
Because entitlement to Tax Credits is dependant in part on your income, the higher your income, the fewer Tax Credits you will receive.
How are Tax Credits calculated?
The calculation is complicated, so I’m not going to go into great detail. However, there are a number of elements to Tax Credits to which people are entitled which can total anywhere from £7,000 (if you’re claiming both Working Tax Credit and Child Tax Credit) upwards, depending on your precise circumstances. The total amount of entitlements is then reduced by 41p for each £1 that a person’s (or couple’s) income exceeds £6,420 (£15,860 if you’re only entitled to Child Tax Credit).
Part 2 next week!
Paul
