Working Tax Credit (WTC) was introduced on 6 April 2003 and is administered by the Inland Revenue. It is an income-based credit, meaning that it is subject to 'means-testing'. It is for working adults where the claimant or the claimant's partner fit into the following categories:

• Working for 16 hours or more a week and either having
  • responsibility for a child,
  • having a disability that proves a disadvantage in getting a job
  • qualifying for a 50+ element,
• Working for 30 hours or more a week and be aged 25 or over.

WTC is payable and assessed on a yearly basis, in line with the tax year, which runs from 6 April to 5 April. It is based on income only and not capital, but 'income' does include actual income, such as interest, from capital. It can be paid in addition to most other benefits, but may, itself, count as income for some other means-tested benefits such as housing benefit and council tax benefit, which might thus be reduced.

The maximum amount of WTC is worked out by adding together various elements depending on individual circumstances. The elements are:

• a basic element, paid to anyone entitled to WTC;
• a second adult element;
• a lone parent element;
• a 30 hour element if the claimant, or the claimant and partner together, work 30 hours or more per week and have children;
• a disability element if disabled and in receipt of certain benefits and working at least 16 hours per week;
• a severe disability element;
• a 50 plus element, in certain circumstances, and a childcare element providing up to 80% of 'eligible' childcare costs.

Payments of tax credit will be made directly into the claimants' nominated post office, building society or bank account. It is awarded for a complete tax year and, while a claim made after April may run only from the date of claim to the end of the tax year, there are circumstances where limited backdating may be applied. It is important to keep the Inland Revenue informed of any change in circumstances which might affect the amount of tax credit due in order to avoid any underpayment or overpayment.

Application packs for WTC are available from HMRC (HM Revenue & Customs) Enquiry Centres, local social security offices and Jobcentre Plus offices.
They can also be applied for on-line at www.hmrc.gov.uk/taxcredits.
Further information can be obtained via the tax credit helpline, telephone 0845 300 3900 (Minicom 0845 300 3909).

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