Dads guide to child tax credits

Child tax credit is a benefit designed to help with the costs of raising a child for people on a low income. Child tax credit has now been replaced by Universal Credit. Read on to find out more about Child Tax Credit, Universal Credit and how to claim.



Raising a child is an expensive business from the outset. Buying a car seat, buggy, nappies and all the other essentials can have a real financial impact. As your children grow, the costs just keep on coming, with school uniform, childcare, clubs and hobbies all draining your bank account.

The good news is that there is help available for those on lower incomes. Child tax credit was initially brought in to reduce families’ costs, but it has since been wrapped up into Universal Credit. There is also a separate payment, Child Benefit, which many families can claim.

Who is eligible for Child Tax Credit?

Since the introduction of Universal Credit, Child Tax Credit is now only available to those who claim the severe disability premium.

Everyone else now needs to apply for Universal Credit. This is a monthly payment for people who are out of work or receiving a low income. It replaces child tax credit, housing benefit, income support, jobseeker’s allowance, ESA and working tax credit.

If you’re on a low income or unemployed, are between 18 and state pension age, live in the UK and have less than £16,000 in savings, you may be able to claim Universal Credit. To find out how to claim, visit the government website.

How does Universal Credit compare to Child Tax credit?

Some families will be better off with Universal Credit. If you’re working you may be able to claim back up to 85 per cent of childcare costs. With Child Tax credit this was limited to 70 per cent of costs.

What’s the difference between Child Tax Credit and Child Benefit?

Child Benefit is a straightforward payment available to UK residents who are bringing up a child under16, or under 20 if they stay in education or training. There is an income limit for Child Benefit – if one parent earns over £50,000 per year they may need to pay the benefit back in tax. Most earners above this limit find it simpler not to claim the benefit.  You can apply for child benefit here.

Child Tax Credit, on the other hand, was brought in to support people on a low income and is means tested. Universal Credit works in the same way.

Is there a tax credits helpline?

There are lots of ways to manage your tax credits and Universal credit. The most important thing is to make sure you promptly update HMRC about any changes in your circumstances – getting married, for example, or changing your working hours.

The government provides an online tax credits service; has a help function called Ask Ruth, and you can also ask questions via  Twitter on @HMRCcustomers.

Most Universal Credit changes are made online via a dedicated portal. You’ll need to create an account. There are also free Universal Credit helplines: 0800 328 9344 and 0800 328 5644.

Are there other ways to manage family costs?

Yes – there are other initiatives in place that might help you manage your finances. We have previously

written about tax-free childcare, brought in to replace childcare vouchers. You might also find this article about avoiding dad debt problems useful.

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