Working Tax Credit is a government benefit that was designed to top up the income of people on low earnings who are working. Although new claims have now largely been replaced by Universal Credit, many people across the UK still receive Working Tax Credit as part of existing tax credit awards.
If you already receive Working Tax Credit, understanding how it works remains important because changes to your income, family circumstances or employment can affect your payments. Eventually, most remaining claimants will move to Universal Credit through the Government’s managed migration programme.
This guide explains exactly what Working Tax Credit is, who can still receive it, how payments are calculated, what happens if your circumstances change and what support may also be available.
Working Tax Credit is a means tested benefit that provides financial support to people who work but earn a relatively low income. It helps increase household income by providing regular payments based on your earnings, working hours, age, disability status and family circumstances.
New applications for Working Tax Credit have closed in most cases because Universal Credit has replaced it. However, existing claimants can usually continue receiving payments until they are invited to move to Universal Credit.
Working Tax Credit helps people who are in paid employment but whose income is not enough to comfortably meet everyday living costs.
Unlike unemployment benefits, Working Tax Credit rewards people who are working by providing additional financial support alongside their wages.
The amount paid depends on several factors including:
It was introduced to encourage employment while helping lower income households maintain financial stability.
Working Tax Credit is gradually being phased out because the Government introduced Universal Credit to replace six separate benefits with one monthly payment.
Universal Credit now replaces:
People already receiving Working Tax Credit normally continue receiving it until instructed to move across.
In almost every situation, no.
New claims have closed throughout the UK because Universal Credit has replaced the benefit.
Only people with existing tax credit awards continue receiving payments while they wait for managed migration.
If your tax credits end or your circumstances require a completely new claim, you will normally need to claim Universal Credit instead.
You may still receive payments if:
Many households still receive ongoing payments during this transition period.
| Situation | Outcome |
|---|---|
| Existing Working Tax Credit claimant | Payments usually continue until migration |
| Never claimed before | Usually need Universal Credit |
| Claim ended completely | Normally cannot restart Working Tax Credit |
| Invited to move to Universal Credit | Working Tax Credit usually ends after migration |
Eligibility depends upon both your employment and your financial circumstances.
Historically, claimants generally needed to:
Different rules applied for:
Working hours historically depended on your situation.
| Circumstance | Typical Minimum Hours |
| Single person aged 25 to 59 | 30 hours |
| Couple with children | Usually 24 hours combined |
| Lone parent | Usually 16 hours |
| Disabled worker | Usually 16 hours |
| Person aged 60 or over | Usually 16 hours |
Meeting the working hours requirement alone did not guarantee entitlement because household income was also considered.
Working Tax Credit is means tested.
The lower your household income, the more support you may receive.
Income considered may include:
Payments gradually reduce as income increases.
This means there is no single amount everyone receives.
Yes.
If you live with a partner, HM Revenue and Customs normally assesses your combined household income rather than individual earnings.
This ensures payments reflect the financial position of the household.
| Annual Household Income | Possible Effect |
| Lower income | Higher award |
| Moderate income | Reduced award |
| Higher income | Award may stop |
Exact calculations depend on several individual circumstances.
Unlike Universal Credit, Working Tax Credit does not have a fixed savings limit that automatically prevents entitlement.
However, savings can generate income.
Any taxable income received from investments or savings may affect your award because total income forms part of the calculation.
This means:
This is one important difference between Working Tax Credit and Universal Credit.
| Benefit | Savings Limit |
| Working Tax Credit | No fixed savings limit |
| Universal Credit | Savings rules apply above certain thresholds |
Working Tax Credit is made up of different elements.
These could include:
Your final award depends upon:
Each person’s entitlement is unique.
Payments are normally made directly into your bank account.
Depending on your circumstances they may be paid:
Payment frequency depends on your household situation and the amount awarded.
For most people, no.
If you need financial support today and do not already receive Working Tax Credit, you will usually need to apply for Universal Credit.
Existing claimants should:
The Government is gradually moving existing claimants from Working Tax Credit onto Universal Credit.
When you receive a Migration Notice you should:
Missing the deadline could affect your entitlement.
Whether updating an existing claim or moving to Universal Credit, you may need:
Keeping documents organised can make the process much easier.
Many overpayments occur because changes are reported late.
Common mistakes include:
Reporting changes promptly helps prevent unexpected overpayments.
| Mistake | Possible Result |
| Income not updated | Overpayment |
| Hours reduced but not reported | Incorrect award |
| New partner not declared | Benefit adjustment |
| Migration deadline missed | Claim may end |
Sarah works 32 hours each week in retail and has been receiving Working Tax Credit for several years.
She continues receiving payments while waiting for her Migration Notice. When she eventually receives the letter, she claims Universal Credit before the deadline to ensure a smooth transition.
David increases his annual earnings after receiving a promotion.
Because he reports the increase quickly, HM Revenue and Customs adjusts his award, reducing the risk of an overpayment.
Rachel reduces her working hours due to ill health.
She informs the relevant department immediately. Her entitlement is reassessed based on her updated circumstances.
Working Tax Credit is financial support for people on lower incomes who work. Existing claimants may continue receiving payments until they move to Universal Credit.
In most cases no. New applicants usually need to claim Universal Credit.
Yes. It is gradually being replaced through managed migration to Universal Credit.
Continue reporting changes and follow any official instructions you receive.
Payments depend on household income, working hours and personal circumstances.
Savings themselves generally do not prevent entitlement, although income from savings may be taken into account.
Existing self employed claimants may continue receiving support if they remain eligible.
Yes, household income and combined working hours are considered where relevant.
You should report changes promptly because your payments may increase or decrease.
No. You should wait until you receive an official Migration Notice before taking action unless your circumstances require a new Universal Credit claim sooner.
Missing the deadline could result in your Working Tax Credit ending, so it is important to respond promptly.
Depending on your circumstances, you may also qualify for:
Many households receive more than one form of support where eligible.
| Benefit | Purpose |
| Universal Credit | General living costs |
| Child Benefit | Support for children |
| Pension Credit | Support for pensioners |
| Personal Independence Payment | Disability related costs |
| Carer’s Allowance | Support for unpaid carers |
The most reliable information comes directly from official Government guidance.
Useful resources include information about:
Always rely on official guidance when making decisions about benefit claims.
This article has been reviewed against current UK Government guidance relating to Working Tax Credit and the ongoing transition to Universal Credit.
Information has been prepared using official Government policy together with established guidance on tax credits, eligibility rules, managed migration and claimant responsibilities.
Because benefit regulations can change, readers should always confirm the latest information before making financial decisions or submitting a claim.
Working Tax Credit has helped millions of working households supplement their income over many years. Although new claims have largely closed, existing claimants continue to receive support while moving gradually to Universal Credit.
Understanding how Working Tax Credit works remains important if you currently receive payments. Keeping your information up to date, reporting changes promptly and responding to official correspondence will help protect your entitlement and reduce the risk of overpayments.
If you are looking for financial support for the first time, Universal Credit will usually be the correct benefit to claim instead of Working Tax Credit.
Benefits Advice UK provides free information to help people better understand the UK benefits system. Always check the latest Government guidance before making financial decisions.
Information on this site is based on official UK guidance.
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