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Working Tax Credit
[ch 2: pages 24-25]Working Tax Credit is paid to those who work but are on a low income. A claim for Working Tax Credit is based on the hours you work and get paid for, or expect to be paid for — as either an employee or a self-employed individual. If you are responsible for any children under 16, you could get the Child Tax Credit element of Working Tax Credit. You can also qualify if you have children aged 16 to 19, as long as they are in certain types of education or training.
The maximum Working Tax Credit rates for 2015-16 are shown in the tables below.
Working Tax Credit rates 2015-2016
| Change from 2014-2015 | Annual amount | Weekly amount | |
|---|---|---|---|
| Basic element | plus £20 | £1,960 | |
| Couple and lone parent element | plus £20 | £2,010 | |
| 30-hour element | plus £10 | £810 | |
| Disabled worker element | plus £35 | £2,970 | |
| Severe disability element | plus £20 | £1,275 | |
| Childcare element (one child) | unchanged max | £175 | |
| Childcare element (two or more children) | unchanged max | £300 |
The withdrawal rate is the amount that is deducted from the elements described above. If the gross annual income exceeds a predetermined first threshold of £6,420 (in 2015-16) then the first (and main) withdrawal rate is 41%. This means that for every £1 earned above the threshold, 41p of the WTC entitlement is withdrawn (See page 26 for further information about income disregards).
Tax Credit income thresholds and withdrawal rates 2015-2016
| Change from 2014-2015 | ||
|---|---|---|
| First income threshold | unchanged | £6,420 |
| First withdrawal rate | unchanged | 41% |
| First threshold for those entitled to Child Tax Credit only | plus £95 | £16,105 |
| Income rise disregard | unchanged | £5,000 |
| Income fall disregard | unchanged | £2,500 |