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All parents in the UK can claim child tax credit for every child who is their responsibility. The child or children should be under 16. If a child is in undergoing an approved education or training program, the credit is available up to the age of 20.
The basic element, also known as the family element, is up to £545 every year. In addition to the basic element, credit of up to £2,750 per year is available for each child. If a child is disabled, up to £3,100 is available as child tax credit each year.
You can claim the child tax credit even if you are not working. There is no fixed maximum income limit as the amount of credit depends on yours and your partner's actual financial situation. For instance, the maximum income limit can be £30,000 for a two-child family. If your household income is above £30,000 per year and you have two children, you will not be eligible for the child tax credit.
Also, the child tax credit is non-wastable and available even for those with low-income tax liability. For example, you are eligible for a child tax credit of £2,000 every year, and your income tax liability is only £1,000. In this case, you will get a child tax credit of £1,000 into your bank account after offsetting £1,000 from your income tax liability.
The amount of child tax credit is transferred straight into the bank account, building society account or credit union account. You will get this money every four weeks or sometimes each week based on circumstances.
The amount of child tax credit will increase by 1% every three years to keep up with increases in childcare expenses due to inflation. So, if you are now getting £3,000 per year, with all other things being the same, after three years, your child tax credit can go up to £3,030 per year.
Child tax credit increases your household income. For example, your combined annual income is £20,000, and you have two children. Let's say, you get a child tax credit of around £4,415 per year, then your income will increase with this amount. So now with the child tax credit, your annual income will be £20,415 instead of £20,000 without the credit.
To know more about how child tax credit can influence your annual budgets, we recommend you to use our household budget calculator.
Child tax credit is different from child benefit. Child tax credit varies with income whereas child benefit is a fixed amount irrespective of income.