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Tax credits
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Money during maternity and adoption factsheet
Tax credits are paid by Her Majesty's Revenue and Customs (HMRC), and the amount you receive depends on your income and circumstances.
Having a baby or adopting a child may mean that you become entitled to tax credits for the first time or that the amount you already receive will change.
For more information about tax credits call the Lone Parent Helpline and ask for our factsheet Benefits and tax credits for lone parents who work 16 or more hours a week.
Some of your income is ignored when tax credits are calculated, including the first £100 per week of Statutory Maternity Pay, Statutory Paternity Pay or Statutory Adoption Pay you receive, all of your Maternity Allowance, Child Benefit and child maintenance.
Child Tax Credit
You can claim this if you are responsible for a child. An extra amount is payable for a child aged under one year, which means your Child Tax Credit will go down once your child reaches their first birthday. If you are on Income Support or income-based Jobseeker's Allowance, you are entitled to the maximum amount payable to a family in your circumstances.
Working Tax Credit
This is for people with a child or disability who normally work 16 hours or more a week, and for people aged 25 or over who work 30 hours or more a week.
You are treated as being employed if you were working 30 hours a week or more (or 16 hours if you are disabled or already have a child) immediately before you start Ordinary Maternity Leave, Ordinary Adoption Leave or Paternity Leave. If you are aged over 25 and were working between 16 and 30 hours a week before your child was born, you will be treated as working from the day after your child was born.
It does not make a difference whether or not you return to work after your leave.
This means you can claim Working Tax Credit over the maternity or adoption period:- for 39 weeks (26 weeks of your Ordinary Maternity/Adoption Leave plus 13 weeks of Additional Maternity/Adoption Leave) whether or not you are entitled to Statutory Maternity Pay, Maternity Allowance or Statutory Adoption Pay;
- in some other situations, including for up to 28 weeks if you are unable to work due to sickness (including if this is due to your pregnancy) and you have made a claim for Statutory Sick Pay, the short-term lower rate of Incapacity Benefit or Income Support; and
- when you are actually working 16 or more hours a week, for example, if you return to work for 16 or more hours a week after your leave.
Working Tax Credit can also include an amount towards certain childcare costs. If you are already receiving an amount for childcare costs for another child, this will continue and you can also claim for childcare costs for the new child while you are on maternity or adoption leave.
Making your claim and reporting changes
To claim tax credits, call the Tax Credits Helpline on 0845 300 3900 and ask for claim form TC600. Also call this number to report changes in circumstances that will affect the amount of tax credits your receive for example, when you have a new baby and when your income changes.It is important to report changes as soon as possible so you do not miss out on money your family is entitled to or have to repay an overpayment. You must tell them within one month if the number of children you are caring for changes, if a new partner moves into your household, if you stop working or start working less than 16 hours a week or if your childcare costs either stop or reduce by £10 for more than four weeks in a row.
If you are over 25 and have been working 30 or more hours a week, you may become entitled to Working Tax Credit as soon as you start maternity or adoption leave if your income is low enough.
When your child is born or adopted contact the Tax Credit Office to make a new claim or report a change in circumstances so your tax credit award can be re-calculated. Contact them within 3 months so you do not lose money. When you make your claim, they will calculate the amount you are entitled to based on your income for last year (April 2007-April 2008). If your income is now lower, ask them to calculate your award based on your income for this tax year (April 2008-April 2009).
It can be difficult to provide an estimate of your income if you are not sure whether you are returning to work at the end of your maternity or adoption leave or whether you may be working less hours if you do return to work. You can report another change and provide another estimate of your current years' income when you have a better idea of what this may be but in the meantime you may be under- or overpaid tax credits.
If your income increases (for example, because you return to work), the first £25,000 will be ignored in the calculation for that tax year, unless the details you have provided are for the current tax year rather than the previous one. An increase above this amount may reduce your entitlement and may be recovered from next year's tax credit award.
Next page: Income Support
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