Tax Credit (Child/Working)
UK tax glossary · Last reviewed: April 2026
Tax Credits (Child Tax Credit and Working Tax Credit) are administered by HMRC rather than the DWP but function as means-tested welfare benefits. They provide income-related support for families with children and working people on low incomes.
New claims for tax credits have not been possible since Universal Credit (UC) launched in a claimant's area. Existing claimants are gradually being migrated to Universal Credit. Migration notices are sent by post; claimants must move within three months.
Tax Credits are calculated on annual household income and adjusted 41p for every £1 of income above the relevant threshold. Overpayments are common because income is reported annually and can change mid-year — overpayments must be repaid.
Common questions
Do Tax Credits count as income for other means tests?
No — Tax Credits are specifically excluded from assessable income for most other means-tested benefits. However, some housing benefit calculations may be affected depending on circumstances.
What is the managed migration process for Tax Credits?
HMRC sends a migration notice giving three months to claim Universal Credit. If you claim before the deadline, transitional protection protects your income level. Failing to claim means Tax Credits stop automatically.
Related resources
TaxHelper provides general information based on published HMRC rates and guidance. It is not regulated financial or tax advice. For decisions involving significant sums, complex circumstances, or if you are unsure, speak to a qualified accountant or HMRC directly.