Claim tax credits now or miss out
Published 22 April 2016
You could miss out on thousands of pounds if you don’t claim tax credits before Universal Credit reaches your area.
The Government is gradually rolling out the new Universal Credit benefit system to various areas of the country between now and 2018. Universal Credit is a new type of benefit that combines six existing ones.
From April, work allowances – the equivalent of tax credits – will be cut for people eligible for Universal Credit. But until Universal Credit comes into force in your area, you can still apply for tax credits and lock in the higher payment.
Call to action
Trade union Unison is urging low-paid workers to apply for tax credits or risk losing out. If you register for tax credits before Universal Credit comes to your area, you could get a higher sum and protect this payment for the future. Universal Credit combines jobseeker’s allowance, housing benefit, working tax credit and child tax credit, income support and employment and support allowance.
If you’re already claiming tax credits and the Universal Credit payment would be lower than what you receive, you’ll keep getting the higher tax credit amount when you move onto Universal Credit. Even if you’re claiming tax credits and the Universal Credit allowance turns out to be higher, you can move to the higher payment.
Unison says that a childless couple over the age of 25, earning the National Living Wage for 20 hours a week would be better off by £2,756 a year if they register now. If you leave it too late, you could lose as much as £50 a week.
Reductions to work allowances under Universal Credit are still going ahead, despite the Government announcing a U-turn on cuts to tax credits last October.
Are you entitled to tax credits?
If you think you’re eligible for tax credits, you should check as soon as possible. There are two types of tax credits available.
Working Tax Credit is designed for people who work on a lower pay. You may be eligible for Working Tax Credits if your household income is under £18,000 and you don’t have children. If you do have kids, then the threshold can vary between £41,700 and £73,100 depending on how many kids you have.
Child Tax Credit is designed for people who have children eligible for child benefit. You don’t need to work to get this and may be eligible as long as your household income is under £26,000 and you have one child. The maximum threshold is £46,500 for four children.
You can check whether you’re entitled to make a claim with the Government’s tax credits test. If you are eligible, you should apply as soon as possible. As long as your circumstances don’t change, you will receive tax credits until Universal Credit reaches your area. If it already has, it’s too late to make a new claim.
You can find out when Universal Credit comes to your local area on the Gov.uk website.
For tips on how to cope when you move to Universal Credit, check out our blog.