Help for working parents There are two tax credits available to working people with children - child tax credit and working tax credit.

In this article

Who can claim? What childcare is covered?

How much are the credits worth? How are the credits paid?

How do I make a claim? What happens if my circumstances change?

Child tax credit (CTC) and working tax credit (WTC) help families on a low or middle income.

CTC is paid in addition to Child Benefit, whether or not the claimant is working. WTC is paid to those in low-paid work and can include help with childcare costs.

For both credits, the children must be under 16, or between 16 and 19 and in full-time, non-advanced education (that is, not at university).

CTC is paid to the main carer, who must be over 16 years of age. WTC is paid to those over 16 years of age on low pay who are working at least 16 hours a week.

The credits vary according to the number of children and whether the claimant is a lone parent or part of a couple.

WTC contains other credits as well - for people with disabilities, for those over 25 and working more than 30 hours, and people over-50 returning to work.

You can only use approved childcare, which means a childminder, nursery, playscheme, out-of-school scheme, preschool or playgroup registered with the local authority.

You can't claim childcare costs if you're paying a relative, nanny or other person who's not registered.

Both CTC and WTC are means-tested: the more you earn, the less credit you receive. However, you don't start to lose any CTC until all your WTC is gone.

Savings don't count as income, although interest earned on savings does.

Directgov has information about how much you may be entitled to receive.

WTC is paid via the employer through the wage packet. CTC and the child-related elements of WTC are paid to the children's main carer.

If you're self-employed, tax credits are paid directly by HM Revenue & Customs.

A couple makes a 'joint' claim and a single person a 'single' claim. When a couple splits up or a single person becomes part of a couple, they must make a new claim.

You can claim for both credits on one form. This is available online and at HM Revenue & Customs Enquiry Centres, or you can order one by calling the tax credit helpline on 0845 300 3900 (England, Scotland, Wales) or 0845 603 2000 (Northern Ireland).

An annual review pack is sent to claimants after the end of the tax year (in April).

As with annual tax returns, you'll be asked to confirm details of your circumstances and income for the previous tax year. The only changes you must report during the year are:

• If you stop being/become part of a couple
• If childcare costs change significantly for four weeks in a row

If you don't pass on this information, you may be fined.

It's in your interests to tell HM Revenue & Customs promptly about any relevant changes in your financial circumstances during the year. Any overpayment will have to be paid back and changes in your favour - say, if your income has reduced and the credit increased accordingly - can only be backdated for three months.

Annual income rises during a tax year of up to £2,500 do not affect the level of tax credits received during that year.

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