WTC is a tax credit designed to top up earnings of low-paid workers. It replaces the adult support in Working Families Tax Credit and Disabled Person's Tax Credit.
CTC brings together the various strands of support for families with children: the child elements in Income Support, Jobseeker's Allowance, Working Families' Tax Credit, Disabled Person's Tax Credit and the Children's Tax Credit - into one streamlined system. Both tax credits come into effect on 7 April 2003.
WHAT DOES THE WTC COMPRISE?
The tax credit is made up of one basic element (29.20 a week) with additional support for:
* Couples - 28.80 a week
* Lone parents - 28.80 a week
* People working 30 hours or more a week - 11.90 a week
* Disabled workers - 39.15 a week.
WHO WILL QUALIFY FOR WTC?
People responsible for a child/young person can claim WTC if:
* You are aged 16 or over and work at least 16 hours a week.
People without children can claim if they meet certain criteria.
* If your family has savings of 8,000 or more you will usually not be able to claim WTC.
WHO WILL QUALIFY FOR THE CHILDCARE ELEMENT?
As part of WTC you may qualify for help towards the costs of childcare:
* You must be working at least 16 hours a week. If you are part of a couple, both you and your partner must each work at least 16 hours a week, unless one of you is disabled. Voluntary work does not count.
* The childcare must be approved, for example, an approved childminder, nursery or playscheme or an approved childminder who cares for your child in your home.
HOW MUCH IS IT AND HOW IS IT PAID?
The childcare element of the WTC is worth up to 70p in tax credit for every 1 a week spent on approved childcare, up to a limit of 135 a week for one child and up to 200 a week for two or more children.
The maximum childcare element a family can claim is:
* 94.50 a week for one child and
* 140 a week for two or more children.
How much will the credits be worth to families?
The amount of WTC you will receive depends upon your earnings and number of children.
If your family earns less than 97 a week, WTC will be paid at the maximum.
If your family earns more than 97 a week, your WTC will be reduced by 37p in every pound of income over 97.
The CTC is made up of the following elements:
* A family element (10.45 a week) payable to any family responsible for a child.
* The baby element of an extra 10.45 a week until the baby's first birthday
* A child element, of 27.65 a week, for each child
* The disabled child element at 41.30 a week if the child is disabled.
The amounts paid taper as income rises. The maximum a family with one child aged over one earning 10,000 a year can claim is 38.00 a week. The sum reduces to 10.40 a week for a family on 20,000.
For a family with three children over one year old earning 10,000, the maximum is 93.30 a week, compared with 45.50 for a family earning 20,000.
HOW WILL FAMILIES RECEIVE THE CREDITS?
WTC will be paid through your wages if you are employed. If you are self- employed the Inland Revenue will pay you directly. If you are part of a couple, who both work at least 16 hours a week, you can decide who will receive the WTC payments.
The childcare element of WTC and CTC will be paid direct to the child's main carer.
HOW DO YOU FIND OUT MORE?
The Tax Credit Information Pack is available from www.inlandrevenue.gov.uk/taxcredits/welfare_advice_orgs.htm
HOW DO YOU APPLY FOR THE CREDITS?
If you are already receiving Working Families Tax Credit or Children's Tax Credit, you should have been sent a claim pack. If you think you may be eligible and have not had a form you can apply online at www.inlandrevenue.gov.uk/taxcredits or contact the New Tax Credits Response Line on 0800 500 222.
The New Tax Credits Helpline on 0845 300 3900 (England, Scotland and Wales) and 0845 603 2000 (Northern Ireland) is the specialist helpline for detailed information about tax credits.
