Tax credit rules will change tomorrow & £500 bonuses will be issued soon – check now

Martin Lewis outlines eligibility for working tax credit

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Universal Credit and tax credit claimants were given additional support in early 2020 as Rishi Sunak laid out coronavirus support plans. Standard rates for both of these benefits were increased by £20 a week but this support will soon be wound down.

For working tax credit recipients, the basic element of payments was increased by £1,045 per year to £3,040 from April 6 2020.

However, this ends from today, April 5 2021.

Additionally, if a claimant is part of a working household that receives tax credits, they may be eligible for a new one-off payment of £500.

This new payment was introduced to provide extra support when the aforementioned temporary increase to working tax credit comes to an end.

This one-off £500 tax-free payment may be issued if on March 2 2021 the claimant was either getting:

  • Working tax credit
  • Child tax credit and were eligible for working tax credit but they did not get a payment because their income was too high to get working tax credit payments

Eligible recipients will not need to contact HMRC to apply for this payment, HMRC will contact eligible claimants by text or letter in April to confirm eligibility.

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So long as a claimant is eligible, they should get their payment by April 23.

It should be noted claimants will not see this payment on the online tax credit service.

The payment will not affect the claimant’s other benefits.

Additionally, the bonus will not need to be declared as income on Self Assessment tax returns.

New claims for working tax credit can only be made by those who are already receiving the child tax credit.

Most new claimants will instead be directed to apply for Universal Credit, which is set to replace a number of legacy benefits over the coming years.

To get working tax credit, a person must work for a certain number of hours a week to qualify, as detailed below:

  • Aged 25 to 59 – at least 30 hours
  • Aged 60 or over – at least 16 hours
  • Disabled – at least 16 hours
  • Single with one or more children – at least 16 hours
  • Couple with one or more children – Usually, at least 24 hours between the couple with one working at least 16 hours

So long as a person is eligible, they can receive up to £3,220 per year.

The money will be paid directly into their bank or building society account every week or four weeks.

To claim working tax credit, claimants will need to update their existing tax credit claim by reporting a change in their circumstances online or by phone.

Full details on working tax credit rules can be found on the Government’s website.

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