Everyone has heard of Tax Credits. We’ve all seen the Inland Revenue publicity, but the usual reaction is; “That won’t apply to me. I earn too much” or “It’s not worth applying. The Government never give anything to people like me.”
Many people, though, particularly those with young families, are surprised to learn that they are, in fact entitled to some form of Tax Credits.
There are two main types available; Working Tax Credits and Child Tax Credits. The former is only available to families with a household income below £18,000 (or £13,000 for single parent families) but the latter can be available up to a household income of £26,000, for single child famlies, and £32,200 for those with two children.
When starting out on a new business venture, money can often be a major issue, and any extra help is always welcome. It is important to remember, also, that, for the self employed, Working Tax Credits are paid, based on NET income. Just because you have total income of, for the sake of argument, £18,000, does not mean you’re not eligible. By the time you have deducted allowable expenses, such as travelling, telephone, insurance, etc, it is quite likely your net income will fall into the qualifying bracket, and this is where a good accountant will be able to help.
Also, people who are aware that they can claim Tax Credits, often fail to do so, as they feel it’s ‘not worth it’. In this situation though, we need to look at the bigger picture. Whilst the amount of the Tax Credits received may be small, there are a number of further benefits that will make a claim worthwhile, such as free dental treatment, assistance with childcare arrangements etc.
Still not sure? Why not check it out for yourself? The Government have a Tax Credits calculator available online. Simply by entering a few basic details, it will not only calculate whether you are eligible, but also give an indication as to how much you can expect to receive. This calculator is available at http://www.taxcredits.inlandrevenue.gov.uk/Qualify/DIQHousehold.aspx
If you want to know a little more, the Revenue has a fairly comprehensive guide to Tax Credits, generally, which can be found at; http://www.hmrc.gov.uk/taxcredits/start/who-qualifies/what-are-taxcredits.htm