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STARTING A FAMILY
Working tax credit
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 This was introduced in April 2003 to top up the earnings of working people on low incomes irrespective of whether they have children. The credit is paid via the employer to employees and the self employed receive payments direct from the Inland Revenue.
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The annual income threshold for working tax credit is £5,060 with a reduction of 37 pence for every extra £1 of income. There are additional tax credit elements for couples/lone parents, disabled workers and those working more than 30 hours per week.
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The childcare element of working tax credit is to help towards the cost of childcare. The maximum childcare element is 70% of childcare costs up to a maximum of £135 for one child and £200 for two or more children per week ie £94.50 and £140 per week respectively
Children's tax credit
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This replaced children’s tax credit from April 2003. It is a payment to support families with children. The credit is means tested and is made up of two elements: a family element and a child element.
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The family element is payable to any family responsible for a child. It is paid at a higher rate to families with at least one child under the age of one (this is called the baby element).
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The child element is paid in respect of each child and at a higher rate for a child who has a disability. The credit is paid to the main carer.
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