How is the HM Revenue tax credit worked out? Your income is the biggest factor that affects the amount of tax credits you receive.
Tax credit calculations determine which elements you have entitlement to. Then it divides the total by the number of days in a standard tax year.
This guide explains the procedures for calculating how much tax credit you could get in total. But, Universal Credit will replace HMRC tax credits.
The online tool calculates the amount from the current day to the end of the 2022 to 2023 tax year. UK tax years run from the 6th of April to the 5th of April in the following year.
Tax credits are tax-free. In most cases you do not need to be paying National Insurance to qualify or Income Tax. But, you and your civil partner (if you have one) must be at least 16 years old to get tax credits.
You may still qualify if you are in work but you should live in the United Kingdom for most of the year. There are other ways to apply. Call the Tax Credit Helpline for an estimate.
The example below shows how to calculate Working Tax Credits. Make sure you prepare these details before using the government HMRC tax credit calculator UK:
- The total amount of your income threshold for tax credits and how many hours you work.
- The income amount of your civil partner (if you have one).
- The average amount you spend on childcare costs each week as a working family.
- Itemise which benefits you are claiming including any you recently stopped claiming.
Note: You can order a tax credits claim form if you think you qualify. But, you will need to submit the claim form to be sure of qualification and the amount you will get.
What if Your Income is Different from the Previous Year?
The calculating device will ask for your income during the last tax year. Use this information if you think that your income may be different from the previous year.
Follow these steps if you estimate your income to change by more than £2,500 this tax year. First estimate what your income will be and then:
- Subtract £2,500 from the amount if it is increasing (going up).
- Add £2,500 to the amount if it is decreasing (going down).
You should use the adjusted figure instead of your actual income. The reason is because the Tax Credit Office ignores the first £2,500 of your income change. But HM Revenue and Customs calculator does not.
Tax Credit Calculation Example:
Your income for the last tax year was £35,000. You estimate a drop to £25,000 this tax year.
In this case you would enter £27,500 into the online HMRC Working Tax Credit calculator.
What if You are Subject to Immigration Control?
Different rules apply to those with immigration issues. Contact the Tax Credit Office to check whether you qualify and work out tax credits if both these apply:
- You are a couple and one of the partners (or both) are subject to United Kingdom immigration control.
- You are not currently responsible for any children.
Note: Use the HMRC tax credits online calculator 2022/23 to estimate how much you would get every 4 weeks.