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Working Tax Credit
[ch 3: pages 26-27]Working Tax Credit (WTC) is paid to those who work but are on a low income It is gradually being replaced, along with other benefits and tax credits, by Universal Credit (see Chapter 1).
A claim for WTC 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 WTC (see page 69). 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 WTC rates and thresholds for 2017-18 are shown in the tables below.
The withdrawal rate in the table below is the amount that is deducted from the elements described above. If gross annual income exceeds the first threshold of £6,420 (in 2017-18) 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 This means that for every £1 earned above the threshold, 41p of the WTC entitlement is withdrawn.
Working Tax Credit rates 2017-2018
| Basic element | £1,960 a year |
| Couple and lone parent element | £2,010 a year |
| 30-hour element | £810 a year |
| Disabled worker element | £3,000 a year |
| Severe disability element | £1,290 a year |
| Childcare element (one child) | £175 a week |
| Childcare element (two or more children) | £300 a week |
Tax Credit income thresholds and withdrawal rates 2017-2018
| First income threshold | £6,420 |
| First withdrawal rate | 41% |
| First threshold rate for those entitle to Child tax Credit only | £16,105 |
| Income rise disregard | £2,500 |
| Income fall disregard | £2,500 |