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Will you be affected by child tax credit changes?

Published 6 September 2015 by

The way that child tax credits are paid is set to change, according to the recent summer Budget speech. Tax credits are paid to the lowest earners in Britain but if you’ve got a big family, you could miss out when the new changes come into force. Find out how you could be affected with our handy guide.

What’s changing?

At the moment, you can claim up to £2,780 a year per child in child tax credits and the amount you get depends on whether you’re employed and how much you’re earning. You can claim for as many children as you have, so if you’ve got five kids, you could receive up to £13,900 a year.

Under the new rules, you’ll still be able to get up to £2,780 a year per child, but this will only apply for your first two children. If you have any more than two kids, you won’t be able to claim child tax credits for subsequent children.

If you’re already claiming tax credits for three or more children, you’ll still be able to keep claiming. The change affects any new claims made after April 2017, so if you’ve already got two kids and you have another after the cut-off point, you won’t be able to claim for them.

You’ll also be affected if you’re currently claiming tax credits for more than two children and you stop claiming for more than six months, as then you’ll only be able to make a new claim for your first two children. Breaks in claims of less than six months won’t affect you – you’ll still be able to get child tax credits for all of your kids.

What else could you claim?

The new changes don’t impact your Child Benefit, so this won’t change – it’s £20.70 a week for your first child and £13.70 a week for your other kids. You could also be eligible for childcare vouchers. These are available from the Government but you apply through your employer and it means you could pay for childcare using your salary before the tax is taken off, which, in effect makes your childcare 20% cheaper (for basic rate taxpayers). Your employer might also offer a subsidised childcare programme – it’s worth inquiring to see if you could be getting cheaper care for your children.

You could also save on tax if you’re eligible for the Marriage Allowance. This is if you earn less than £10,600 a year, your partner could pay less income tax by claiming back some of your personal allowance. This could save you up to £212 a year which might not sound like much, but it’s worth claiming if you’re entitled to it.

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