Working Tax Credit (WTC) and Child Tax Credit (CTC) were introduced in 2003 and are income based credits for people who are in low-paid employment and/or people who have children.A person may qualify for either one or both of these credits depending on their circumstances. Working Tax Credit is similar to Family Income Supplement in the Republic of Ireland.
Working Tax Credit is means tested and as a result the amount of the award will depend on a person’s income. In order to be eligible a person must be in qualifying remunerative work and:
• meet the required presence and residence requirements
• work 16 hours or more a week, be aged 16 or over and be responsible for a child or qualifying young person; or
• work 16 hours or more a week and have either a mental or physical disability and satisfy the disability conditions,
• be over 25 and working at least 30 hours a week.
The “ordinarily resident” requirement makes it appear that claimants must be resident in the UK in order to qualify for WTC. However, European Union legislation makes provision for nationals within the European Economic Area (EEA) who cross the border to work in the UK. This legislation allows cross-border workers to meet the residence conditions and be treated the same as a resident UK national thus enabling them to claim WTC. Therefore a frontier worker living in the Republic of Ireland and working in Northern Ireland is eligible to apply for Tax Credits provided they meet the other qualifying criteria. However, where a couple is living in another EEA country and only one member of the couple works within UK they cannot make a joint claim for Working Tax Credit.
Working Tax Credit is made up of a number of different elements each of which is awarded depending on a person’s circumstances. These elements are:
The basic element. This applies to anyone who is entitled to WTC.
The second adult entitlement. This applies if you are claiming as a member of a couple. You have to claim as a couple if you are living with your partner. This element is not applicable to frontier workers who must make a single claim unless both people are working in Northern Ireland.
The disability element. This applies if you are disabled, get certain benefits and you work for at least 16 hours a week. (You can get a disability element if your partner qualifies for the credit or two disability elements if you both qualify) Again in the case of a frontier worker this is dependant on whether or not your partner also works in Northern Ireland.
The 50 plus element. This applies if you are 50 or over, began work within three months of your claim and were getting certain benefits in the six months before you started working.
A childcare element which you get if you pay for childcare provided by a registered childminder, out-of-school club or other approved provider.
Tax Credits are therefore made up of various elements based on your own personal circumstances and income, which are added to a basic amount which is payable to anyone who is eligible.
When assessing eligibility to Working Tax Credit a frontier worker will be treated as a single claimant. Therefore they must be over 25 and must be working 30 hours or more per week in order to qualify. When awarding the additional elements only those directly attributable to the worker and their income will be used to calculate entitlement. For example, a frontier worker will only be eligible to receive the childcare element of Working Tax Credit if they qualify for the basic WTC element and their children must be attending childcare facilities which are approved in the UK.
Unfortunately the rules relating to WTC are governed by UK Social Security legislation and EU Directives; as such there are a number of discrepancies surrounding entitlement for non-residents. For example, a parent who is resident in the UK with dependants only has to work 16 hours in order to qualify for WTC, whereas a similar parent resident in the Republic of Ireland must work 30 hours per week.
Working Tax Credit is a complex area, especially for cross border workers, and it is hardly surprising that Tax Credit issues generate a high number of enquiries for the Borderwise project. It is therefore advisable to seek specialist advice .If you have a more specific query please submit an online enquiry to a Borderwise adviser.
To apply for Working Tax Credit you can contact the HMRC tax credit helpline on 0845 300 3900 for an application pack. A person will be required to provide information on their gross annual income which may be available from their P60.
Tax Credits are awarded for a complete tax year. In the UK a tax year runs from 6 April to 5 April the following year. Changes to a claimant’s circumstances can affect their entitlement and they should inform the HMRC of any such changes as soon as possible. Failure to do so may result in a loss of entitlement or an overpayment which will need to be repaid.
© Northern Ireland Association of Citizens Advice Bureaux (NIACAB) 2009
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