All About Child Tax Credit

Child Tax Credit is one of the benefits available to parents to help them cope with the costs associated with bringing up children. If you have children and have just been made redundant, be sure and claim it. You need all the financial help you can get. In fact, the chances are you would have been eligible for it even when you were working. But many people aren't sure what benefits they are entitled to receive. Over £4 billion of tax credit went unclaimed last year!

If you've recently been made redundant and need help navigating your next steps, including which benefits to claim, try our free Redundancy Action Plan.

What is Child Tax Credit?

Child Tax Credit is a state benefit which may be paid to anyone rearing a child. It does not matter whether the parent lives alone or as part of a couple, although, where there are two parents living together, they must apply for the benefit jointly.

Child Tax credit is paid to the main carer of the children within the family and is usually paid directly into a bank account. To claim Child Tax Credit, you need to get hold of the form TC600 from the government, fill it in and send it back. The government makes two tax credits available, and claims for both are made on the same form. The other tax credit is called Working Tax Credit and is designed to supplement the incomes of those who are working in poorly paid jobs. Naturally, therefore, if you have just been made redundant, this section of the form will not apply to you.

Child Tax Credit is made up of several elements. The Family Element is only paid once to each carer, regardless of the number of children. The Child Element is paid proportionately depending on the number of children. If you have disabled children, there are also special Disability Elements for them.

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Who is Eligible for Child Tax Credit?

Any parent with a child below the age of 16 may be eligible for Child Tax Credit. It may also be possible to claim for children up to the age of 19 if they are either in continuing education other than higher education or not working and not claiming benefits. Parents both in work and out of work are eligible to receive Child Tax Credit.

How much Child Tax Credit you will receive depends on the number of children you have as well as your income and that of your partner. Child Tax Credit is not intended exclusively for people on low incomes or on other benefits. Although the amount they will receive will taper off, even those earning relatively high incomes, such as £50,000 per year for example, will still receive some of the benefits of Child Tax Credit.

The amount of Child Tax Credit paid is uprated each year in line with inflation so you will need to check with the Inland Revenue to see what the latest values are. However, a rough rule of thumb is that a parent would be entitled to a maximum of around £2000 per year per child.

If any of your children are disabled or under 1 year of age, you will receive more Child Tax Credit than normal.

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Child Tax Credit When Your Circumstances Change

Once you are receiving Child Tax Credit, you need to keep the government informed about changes in your personal circumstances which might affect your eligibility for benefits. For example, you would need to let Inland Revenue know if your household income changed or if your children started working on their own.

If you don’t supply the updated information in a timely fashion, it can mean that you are overpaid Child Tax Credit. When this is discovered, you will be asked to pay it back. This can be a crushing financial burden if the amount overpaid was significant.

Child Tax Credit – Conclusion

Don’t be one of the 25% of people who do not claim the tax credits to which they are entitled. If you’ve just been made redundant, every penny counts.

Please note that Child Tax Credit is currently being replaced by Universal Credit. You can usually only claim Child Tax Credit if you don’t live in a Universal Credit area. You can see more about Universal Credit and your eligibility via the gov.uk pages.

The Next Step

Now that you have read through the advice above, you might want to put it into practice. Our Redundancy Action Plan lets you tell us about your situation and get a personalised step-by-step plan for dealing with redundancy. Covers finances, job hunting, benefits, and wellbeing. Try it now →