Tax credits are payments made by the UK government to some people with low incomes. You may be entitled to tax credits if you’re a full- or part-time student in further or higher education in the UK. They’re available if you have children and/or you’re working. Here’s an overview with links to more information.
Tax credits are complicated, and the government are making a number of reforms at present. You should seek expert advice from an adviser if you’re unsure – see Where can I find help and more information?
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What are tax credits?
Tax credits are payments from the UK government. You don’t pay tax on the money you receive, and you don’t need to pay it back. The tax credits system has replaced parts of the government’s student support package, so if you’re entitled to any tax credits it’s very important that you apply for them.
There are two kinds of tax credit – you may be able to get both kinds:
- Child Tax Credit: you may be able to claim this if you’re responsible for at least one child or young person.
- Working Tax Credit: you may be able to claim this if you’re working while you study but have a low income. This tax credit also has a childcare element.
To get any tax credits you must be in the UK, ordinarily resident here and have a right to reside in the UK. You’re not eligible if you’re subject to immigration control, but you can still claim as a couple if your partner isn’t subject to immigration control.
If you go abroad as part of your course you can’t get tax credits while you’re away. Speak to your college or university to help you with funding to cover you.
Can I get Child Tax Credit?
You may be able to claim Child Tax Credit (CTC) if you or your partner is responsible for at least one child who normally lives with you. Your child must be either under 16 years old, or under 20 years old and in full-time education or training that’s approved by the government.
You get money for each child you’re responsible for – the basic amount is up to £545 a year, plus extra depending on your income and circumstances (this figure is for 2013). If your child is disabled you’re entitled to even more money, depending on the severity of their disability.
Here’s the government’s information about Child Tax Credit.
If you get a bursary from the NHS you can claim for Child Tax Credit as well as the Dependants’ Allowance part of your bursary. For more information about the bursary, see I’m a student parent – what extra higher education funding can I get?
Child Tax Credit doesn’t usually affect the amount you get for Child Benefit. However, from April 2013 the government is introducing a benefits cap, which means that the combined amount of all the benefits you get (including Child Tax Credit) is capped at a maximum amount. The cap doesn’t affect the entire country at once, but by September 2013 it will. Your benefits aren’t capped if you claim Working Tax Credit. Here’s the government’s information about the benefit cap. Also, take a look at Can I claim government benefits as a student?
Child Tax Credit will be replaced by Universal Credit, starting later in 2013. See What is Universal Credit?
Can I get Working Tax Credit?
You may be able to claim Working Tax Credit (WTC) if you’re 16 years old or older and working for at least 16 hours a week in paid employment, and you’re disabled and/or have a child. If you’re not disabled and don’t have children, you may be able to claim if you’re between 25 and 59 years old and working for at least 30 hours a week, or 60 years old or older and working for at least 16 hours a week.
There are lots of rules about what counts as ‘working’, so check what this means for you. If you work as a student nurse as part of your course, this doesn’t count as work for the purposes of tax credits.
You get a basic amount of up to £1,920 a year, plus extra depending on your income and circumstances (this figure is for 2013). If you’re disabled you’re entitled to even more money, depending on the severity of your disability, and anyone who pays for childcare can get a contribution towards that as well.
If you get student funding from the government that includes support for childcare costs, it’s usually more generous than the childcare element of the Working Tax Credit, but it may better for you or your partner to claim the Working Tax Credit childcare element in other circumstances. Speak to an adviser if you’re uncertain which is better for you (contact details below). Also, take a look at I’m a student and pay for childcare – what extra higher education funding can I get?
Here’s the government’s information about Working Tax Credit.
Working Tax Credit will be replaced by Universal Credit, starting later in 2013. See What is Universal Credit?
How does my income affect what I’m entitled to?
If you’re eligible to receive tax credits, the amount of money you get depends on your income, but most student income is ignored when working out what you’re entitled to. If you live with a partner, their income is taken into account along with yours. If your income (or your partner’s income) is too high, you might not get any tax credits.
The amount of tax credits you’re entitled to is calculated by adding up all your income sources and then deducting anything that doesn’t count. HM Revenue and Customs (HMRC) assesses your claim based on your income for the last complete tax year, but if you expect your income to change (either rise or fall) in the current year, you can ask them to reassess your initial claim.
So if you were in paid employment before becoming a student and your previous income wouldn’t make you eligible for tax credits, you should still claim if your income is going to fall. However, if your income increases again during the current tax year, you might be paid too much in tax credits, and in that case you’ll have to pay it back. Take care not to overestimate any fall in income.
When HMRC calculates the amount of tax credits you’re entitled to, the following are classed as income:
- Child dependants’ grant (except the dependants’ allowance from the NHS in England or Wales, or the Scottish Government Health Directorate)
- Adult Dependants’ Grant
- Lone parents’ grant
- Any part of a Professional and Career Development Loan paid for living expenses.
As well as this, the following all count as income when assessing your tax credits entitlement: any taxable social security benefits, money you earn either as an employee or while self-employed, profits from a business, share dividends or other investment income and pensions. But the first £300 of income from pensions and/or investments is disregarded.
However, for most students the majority of your income is disregarded. The following are all disregarded if you’re taking a course of further education:
- Education Maintenance Allowances
- Maintenance bursaries
- Care to Learn grants
- Discretionary learner support grants
- Residential bursaries
- Childcare bursaries
If you’re taking a course of higher education, the following student income is disregarded:
- Grants or loans for tuition fees
- Maintenance grants
- Assembly Learning Grants
- Special support grants
- Young Students' Bursaries
- Loans for living costs
- Childcare grants
- School meals grants
- Grants for travel, books and equipment
- Disabled students’ allowances
- Travelling expenses
- Postgraduate studentships from any research council, the British Academy, or the Student Awards Agency for Scotland
- Social work bursaries
- NHS bursaries, dependants’ allowances and travel expenses
- Scottish Health Department bursaries
- Access to Learning Fund, Financial Contingency Fund, Support Funds and Discretionary Funds grants
- Hardship grants
As well as this, non-taxable social security benefits (eg child benefit, housing benefit, council tax benefit, income support, maternity allowance and disability living allowance) are all disregarded.
When you’re claiming tax credits, there’s no section on the form to note your student income, so put the details in the ‘other’ section. You should only mention the parts of your student income that count as income for assessment. You shouldn’t put anything that counts as disregarded income on the form. If you’re unsure of what to include, ask your students’ union or association or your institution’s student adviser for assistance.
How do I claim tax credits?
To claim tax credits, you need to apply to HMRC. Call the Tax Credit Helpline to get an application form. For more details, see How to claim tax credits.
Take care when you fill in your form because you may be charged a penalty if it’s incorrect.
Once HMRC has assessed your claim they send you an award notice that tells you the amount you’re entitled to and when payment will start. Use the checklist they provide to check all the details on your award notice, and notify HMRC within one month if you think anything is incorrect.
What is Universal Credit?
Universal Credit is a major change to the way social security works. It will be introduced in spring 2013, beginning in some parts of the country, and then become national from autumn.
Universal Credit will eventually replace a number of benefits and tax credits with one payment, including Working Tax Credit and Child Tax Credit.
Most full-time students won’t be able to claim Universal Credit, but there will be exceptions to this rule, as with the current system.
NUS will provide more detail on student entitlement when information becomes available. Meanwhile, here’s the government information on Universal Credit.
Where can I find help and more information?
The rules about whether you’re eligible for tax credits and how much you get can be very complicated, so seek specialist advice if you’re at all unsure. Here’s where you can find out more:
- Use the government’s tax credit questionnaire to find out whether you’re entitled to tax credits, and the tax credit calculator to work out what you’re entitled to.
- HMRC (HM Revenue and Customs – formerly the Inland Revenue) has lots of online information about tax credits. They also provide a tax credits helpline: 0845 300 3900 (Monday to Friday 8am to 8pm, Saturday 8am to 4pm).
- Ask for information and an application form at your Jobcentre Plus (or Tax Credit Office in Northern Ireland), the Citizens Advice Bureau or the finance office at your college or university.
- The Low Incomes Tax Reform Group has information for students to promote understanding of taxation and related benefits.
- The Child Poverty Action Group in Scotland has a factsheet about tax credits for students.
You may be able to get specialist advice from your university, college or students’ union advice centre or your local citizen’s advice bureau.
Funding for further education overview
Funding for higher education overview
This information was updated in March 2013. NUS provides this information in good faith and has taken care to make sure it’s accurate. However, student finance issues can be complicated, and rules change frequently. You should contact the advice centre in your students' union, college or university for support if you’re uncertain or need more help.