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Working Tax Credit
Working Tax Credit (WTC) was a state benefit in the United Kingdom made to people who worked and received a low income. It was introduced in April 2003 and was a means-tested benefit. Despite the name, the payment was not a tax credit linked to a person's tax bill, but a payment used to top-up low wages. The amount of WTC received could exceed the amount of tax paid. Unlike most other benefits, WTC was paid by HM Revenue and Customs (HMRC).
WTC could be claimed by working individuals, childless couples and working families with dependent children. In addition, some other people were also entitled to Child Tax Credit (CTC) if they were responsible for any children. WTC and CTC were assessed jointly and families remained eligible for CTC even if no adult was working or they had too much income to receive WTC.
In 2010, the coalition government announced that the Working Tax Credit would, by 2017, be integrated into and replaced by Universal Credit. However, implementation of this was repeatedly delayed. Since 2018, it has not been possible to make new claims for Working Tax Credit, and Universal Credit claims have to be made instead.
The payment of Working Tax Credit ended on 5 April 2025 and all remaining claimants had the option to apply for Universal Credit or, in some cases, Pension Credit. CTC also ended on the same date.
The WTC replaced the Working Families Tax Credit (WFTC), which operated from April 1999 until March 2003. The WFTC was itself a transitional system from the earlier benefit for working families known as Family Credit (FC), which had been in operation since 1986.
The WFTC shared its assessment of means and period of renewal (6 months) with FC but moved towards a tax credit approach styled on schemes in other countries, which used an annual declaration of income to assess entitlement for a whole year. Tax credits also replaced the child elements in means tested benefits, the Children's Tax Credit in the tax system, and disabled persons tax credit.
In 2014 WTC and CTC combined distributed £30 billion per year.
The basic operation of the tax credit was broken down into the following steps:
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Working Tax Credit
Working Tax Credit (WTC) was a state benefit in the United Kingdom made to people who worked and received a low income. It was introduced in April 2003 and was a means-tested benefit. Despite the name, the payment was not a tax credit linked to a person's tax bill, but a payment used to top-up low wages. The amount of WTC received could exceed the amount of tax paid. Unlike most other benefits, WTC was paid by HM Revenue and Customs (HMRC).
WTC could be claimed by working individuals, childless couples and working families with dependent children. In addition, some other people were also entitled to Child Tax Credit (CTC) if they were responsible for any children. WTC and CTC were assessed jointly and families remained eligible for CTC even if no adult was working or they had too much income to receive WTC.
In 2010, the coalition government announced that the Working Tax Credit would, by 2017, be integrated into and replaced by Universal Credit. However, implementation of this was repeatedly delayed. Since 2018, it has not been possible to make new claims for Working Tax Credit, and Universal Credit claims have to be made instead.
The payment of Working Tax Credit ended on 5 April 2025 and all remaining claimants had the option to apply for Universal Credit or, in some cases, Pension Credit. CTC also ended on the same date.
The WTC replaced the Working Families Tax Credit (WFTC), which operated from April 1999 until March 2003. The WFTC was itself a transitional system from the earlier benefit for working families known as Family Credit (FC), which had been in operation since 1986.
The WFTC shared its assessment of means and period of renewal (6 months) with FC but moved towards a tax credit approach styled on schemes in other countries, which used an annual declaration of income to assess entitlement for a whole year. Tax credits also replaced the child elements in means tested benefits, the Children's Tax Credit in the tax system, and disabled persons tax credit.
In 2014 WTC and CTC combined distributed £30 billion per year.
The basic operation of the tax credit was broken down into the following steps: