TAX CREDITS EXPLAINED

Tax credits are a way of redistributing income by paying money to those raising children and people on low incomes.

The effect

They have contributed to one of the biggest improvements in child poverty since the war. From 1998/99 to 2012/13 the number of children living below the poverty line fell from 35% of the child population to 19%.

The cost

The taxpayer will spend £30billion on tax credits in the year from April 2015 to April 2016, which is 14% of the welfare budget.

Who can claim?

Around 4.5 million of the population claim tax credits. Those who earn less than £32,969 per year may be eligible to claim, although eligibility for working tax credits depends on the amount of hours a person works.  Those with an income below this level who also have children will be eligible for child tax credits.

The average amount gained for tax credits was £6,340 per year. People claim child tax credits can receive £545 per year as a flat payment, in addition to £2,780 per child. Claimants of working tax credit must work at least 16 hours if they are single, 24 hours a week if they are a couple with children and 30 hours with no children. They will receive a basic amount of £2,010 plus extras and can also receive £210 per week to cover childcare costs.

• If you are wishing to renew your tax credits before the deadline of 31^st July 2015, you can follow this link https://www.gov.uk/renewtaxcredits
• If you would like to apply for tax credits or find out if you are eligible, you can follow this link https://www.gov.uk/qualify-tax-credits

If you are a business owner claiming tax credits you will require a self-assessment submitting, are urged to send in their books as soon as possible because the deadline for self assessments for tax credit claimants is 31^st July 2015.