06 Apr 2024

Child tax credit explained

Calculate how much child tax credit you are entitled to in the 2024-25 tax year

Marianne Calnan

In this article

What is child tax credit?
Who is eligible for child tax credit?
How does child tax credit work?
How much is child tax credit in 2024-25?
How is child tax credit calculated?
What is the two-child limit?
Child tax credit income thresholds
Child tax credit and working tax credit

What is child tax credit?

Child tax credit is a means-tested benefit that can top up your income if you are responsible for at least one child or young person. You don't have to be working to claim.

You can only claim child tax credit if you:

already receive working tax credit
have claimed child tax credit in the past year.

Otherwise, you'll need to claim Universal Credit.

How much you can get depends on your income, the number of children you have, and whether any of your children are disabled. To get the maximum amount of child tax credit, your annual income will need to be less than £19,995 in the 2024-25 tax year, up from £18,725 in 2023-24.

Child tax credit is gradually being replaced by Universal Credit, so not everyone will be able to claim it. The Department for Work and Pensions (DWP) plans to move all tax credit claimants onto Universal Credit by the end of 2024.

Who is eligible for child tax credit?

You don't need to be working to claim child tax credit - instead, you must be responsible for at least one child or qualifying young person. You also don't have to be the child's parent but must be considered as their main carer.

However, if you are working, you may be able to claim working tax credit at the same time as child tax credit. Use our guide to working tax credit to see if you could be eligible to claim both.

You also usually need to have a right to reside in the UK and live in the UK to claim, but there are a few circumstances where you can receive child tax credit and live abroad. These include if:

you're a citizen of a country in a European Economic Area (EEA) and you work in the UK
you're a Crown Servant and have been posted overseas
you're a citizen of an EEA country living abroad and you receive a UK state pension and/or contributions-based Jobseeker's Allowance (JSA).

How does child tax credit work?

Child tax credit will be paid until the September following your child's 16th birthday. So, for example, if your child's 16th birthday was 1 June 2024, your child tax credit would stop on 1 September 2024.

The only way to continue to get child tax credits after this point is if your child is aged between 16-20 and is in full-time education or in approved training, and they don't get paid for it.

You can also claim child tax credit for 16 to 17-year-olds who aren't in further education or training, but they must work for less than 24 hours a week and have registered with their local careers service or Connexions service.

However, you won't be able to claim if the young person is claiming income support, incapacity benefit, employment support allowance or tax credits in their own right.

How much is child tax credit in 2024-25?

Child tax credit is made up of a number of different 'elements' or payments.

You may be eligible for just the family element and child element, or for a few different elements, depending on your family circumstances.

The table below shows the different child tax credit elements and the maximum amount each element is worth in the 2024-25 tax year.

Child tax credit elements	What is it?	Maximum amount paid 2024-25
Family element	The basic element for families with one or more children.	£545
Child element	Paid for each child or young person.	£3,455
Disability element	Paid for each child you are responsible for with a registered disability.	£4,170
Severe disability element	Paid for each child you are responsible for who receives the Highest Rate care Component of Disability Living Allowance.	£1,680

How is child tax credit calculated?

When you submit your child tax credit claim, the Tax Credit Office will first work out the maximum amount of tax credit you are eligible for - based on how many children you have, and if your child has any disabilities.

It will then look to see if any of your tax credit award needs to be reduced because of your income. The higher your income, the less tax credit you are likely to get.

Child tax credit disregards

Income changes from one year to the next may affect the amount of tax credits you're awarded.

When you come to make or renew a claim, you'll be asked for your household income from the previous tax year, and your child tax credits will be calculated based on your previous year's income - unless you specify that you estimate your income for the current tax year to be markedly different.

Then, at the end of the tax year, HMRC will ask for details of your actual income for the current tax year - and will then determine whether you've been overpaid or underpaid.

In 2024-25, the following rules apply:

if your income reduces by £2,500 or less compared to 2023-24, your award will be based on your 2023-24 income
if your income reduces by more than £2,500 compared to 2023-24, your award will be based on your 2024-25 income plus £2,500
if your income increases by up to £2,500 compared to 2023-24, your award will be based on your 2023-24 income
if your income increases by more than £2,500 compared to 2023-24, your award will be based on your 2024-25 income minus £2,500.

What is the two-child limit?

The two-child limit, which came into force on 6 April 2017, means you'll only receive the child element of child tax credit for up to two children.

It applies to anyone with more than two children who are or were born after this date - the child element will continue to be paid for all children born before 6 April 2017.

If you were to have three or more children after 6 April 2017, you'd receive tax credit payments as if you only had two - you will not get an additional amount of tax credit for additional children.

Even if you know the child element won't be payable for your child, you should still make sure you inform HMRC there is a new child living with you to make sure you don't miss out on any related payments, such as the childcare element of working tax credit or the disability element of child tax credit.

Two child limit exceptions

There are a number of exceptions where you may be responsible for more than two children born after 6 April 2017 and receive child tax credit for all of them. The rules don't apply if:

you have multiple births - ie twins or triplets, which take you over the two-child limit
you look after the child as a 'friend or family carer'
you have adopted the child (unless you were a parent or step-parent of the child prior to adoption)
a child you have been claiming for has a child of their own
the child was born as a result of non-consensual conception.

In the last instance, you'll need to fill in a non-consensual conception form with the help of your doctor, social worker, or a specialist rape charity. If you've been affected by sexual assault and want to talk to someone, you can get support from Women's Aid, Victim Support or Rape Crisis.

Child tax credit income thresholds

The income threshold in 2024-25 for receiving the maximum amount of child tax credit is £19,995.

For every £1 of income over this threshold you earn per year, the amount of tax credit you'll be paid decreases by 41p.

Child tax credit reductions example

For example, if you received the family element and child element of child tax credit and earned £18,000 a year, you'd get the full £4,000 (£545 + £3,455).

If your income went up to £22,000, the amount of tax credit you could earn would reduce by:

41p for every £1 over £19,995 you earn
£22,000 is £2,005 over the threshold
£2,005 x 0.41 (or 41p) is £822.05.

The total amount of child tax credit you would get is £3,177.95 (£4,000 - £822.05)

Find out more: use HMRC's tax credits calculator for an estimate based on your income and family circumstances

What counts as income?

When applying for tax credits, or renewing your tax credits, there are some types of income you have to report - no matter how much you earn.

These are:

money earned through employment and self-employment
taxable social security benefits
student dependent grant
miscellaneous income, such as a business start-up allowance.

Other income sources only have to be reported if you earn more than £300 a year from them. Note that if you're claiming as part of a couple, this £300 threshold is shared between both of you.

These are:

income earned on your savings, before tax
investments, such as company dividends
pensions
income from property
income from trusts, settlements and estates
foreign income.

You don't have to declare income from tax-free savings interest (earned by money saved in Isas) or rent received through the rent-a-room scheme.

Child tax credit and working tax credit

If you qualify for child tax credit and you're in work, you might also be able to claim working tax credit at the same time. When you apply for child tax credit, you'll also be told if you can apply for working tax credit. You don't have to apply for them separately.

Like child tax credit, working tax credit is also made up of several different elements that you might be eligible for depending on your circumstances.

For those with children, the childcare element of working tax credit may be particularly useful. This payment helps with the expenses of having someone look after your child while you're at work.

Bear in mind that it's very complicated, and HMRC is best-placed to tell you exactly what you're eligible to get.

Find out more: working tax credit explained

How to renew tax credits

Unlike other benefits, tax credits usually have to be renewed each year by 31 July in order to continue receiving payments from HMRC.

The renewal process is necessary, as the amount of money you'll receive depends on how much money you earned in the previous year. So, how much you're paid in 2024-25 will depend on what you earned in 2023-24.

If you already claim tax credits, you'll usually receive a renewal pack through the post between April and July. If you haven't received it by July, contact the tax credits helpline on 0345 300 3900.

If your renewal pack just states 'check now', then all you need to do is see whether your details are correct. If they are correct, you don't need to do anything, as your tax credits will be automatically renewed. But if any of the information is wrong, you need to let HMRC know.
If there is a red line across the first page of your renewal pack and it says 'reply now’, then' you'll have to submit your information. Make sure you renew by 31 July or you might miss out on your payments.

You can either do the forms and send them in the post, renew over the phone by calling HMRC, or use the online renewal service or HMRC app.

You'll need the following information to renew your tax credits, so it's a good idea to have it to hand before you get started:

Your National Insurance number
Details about any changes to your circumstances - eg if your salary has changed
The 15-digit reference number on your renewal pack
Your total income for the last tax year. If you're applying for tax credits as a couple, you'll need to provide how much your partner earned too.

You must make sure all of your information is correct and up to date. Failure to do so could mean you'll have to repay any overpayments you receive and, if HMRC thinks you purposely gave the wrong information in order to get more money, you could be fined up to £3,000.

Once you've renewed, the tax credit office will be in touch to let you know how much you'll be paid in tax credits next year. This should be within eight weeks of them receiving your renewal.

Failure to renew tax credits

If you miss the 31 July deadline to renew, your tax credit payments will stop. There might not be much you can do about it unless you have a good reason for being late.

What's more, HMRC may also recover any tax credit payments made to you between April and September, as you will have lost your right to the payments for the entire current tax year.

If you feel you had a good reason for being late, contact HMRC to explain. If it accepts your reason, you may be given until 31 January to renew - but it's at HMRC's discretion.

Not having accurate figures for how much you earn is not a valid excuse for missing the deadline. If you're not sure, you can use estimated figures when you renew your tax credits. However, you'll need to provide the accurate amounts by 31 January the following year.

Reporting changes to your circumstances

You shouldn't wait until you renew your tax credits to let HMRC know if your circumstances have changed. You must tell HMRC within a month of certain changes happening or risk a fine of up to £300.

These include:

Relationship changes - if you're now living with someone, have got married or are in a civil partnership, or were claiming as a couple and have split up - HMRC needs to know.
Job changes - you must tell HMRC if you stop working, the number of hours you're working changes, you've been on strike for more than 10 days or you lose your right to work or live in the UK.
Childcare cost changes - if your childcare costs stop or go down by more than £10 a week for at least four consecutive weeks, you must inform HMRC. The same goes if a child or young person you're responsible for moves out, starts to claim their own benefits, or starts or leaves full-time education or approved training, or starts paid work for more than 24 hours a week.

If you give HMRC the wrong information, you could be charged up to £3,000.

If you experience any changes to your circumstances that aren't listed, but could have an effect on how much tax credits you get paid, contact HMRC as soon as possible, just in case.

Find out more: changes that affect tax credits

Is child tax credit the same as child benefit?

No. Child benefit and child tax credit are different payments, and you can claim both at the same time.

Both are government payments paid to those who are responsible for children. While child tax credit now has a two-child maximum for children who are born after 6 April 2017, with child benefit you can continue to get additional payments for multiple children.

Child benefit isn't means-tested, so anyone can claim it no matter how much they earn (although if you or your partner earns more than £50,000 a year, you will have to pay the 'high-income child benefit charge' - read our guide to child benefit rates for more information).

Child tax credit: your questions answered

We answer some of the most common questions about child tax credit and how it works.

Tax credit can usually be backdated by up to a month. That's why, if your circumstances change - for example, you have a new baby - it's important to tell HMRC within a month of it happening. That way, if you're eligible to get paid more, you won't miss out.

If the change means you'll get paid less, but you don't tell HMRC, they'll make you pay back any extra money you've been given, which could leave you out of pocket. So, again, it's best to tell HMRC as quickly as possible.

You can choose to either get paid once a week, or once every four weeks - you can choose between these options on the claim form.

It can take up to five weeks to process a new claim, so you may have to wait a while. You'll be sent an award notice in the post to tell you when your first payment will be made.

You might get paid slightly earlier whenever there's a bank holiday, or some local holidays in Scotland. HMRC has a list of all early payments on its website.

Sometimes, people receiving tax credit payments are paid too much by HMRC.

You might be overpaid by HMRC if:

you don't give the correct information when you first claim or when you renew your claim at the end of the year.
you're late telling HMRC about a change in your circumstances or a significant increase in your income.
you give the wrong information when you tell HMRC about a change in your circumstances.
HMRC makes a mistake when processing your tax credit award.
HMRC doesn't act on information you have supplied.

This might sound like good news, but HMRC will demand you pay back the extra money, which can cause problems if you've already spent it.

If you think you've been overpaid, you should let HMRC know as soon as possible to avoid getting into debt.

HMRC will recover the money owed from future payments. If you no longer get the benefit, you will have to repay HMRC directly.

If you think HMRC has made a mistake, call the helpline. You should also bear in mind that fewer than one in 10 tax credit disputes are successful.

Find out more: tax credit appeals and complaints

Tax credits are usually considered to be a benefit because they're based on how much you earn and your circumstances. But they're different from benefits such as income support and housing benefit. For one thing, they're managed by HMRC, rather than the Department for Work and Pensions (DWP). What's more, you have to renew your tax credit claims each year, which you don't have to do with other benefits.

There are three instances where you may be able to deal with tax credits for someone else:

When you're an authorised intermediary contacting the tax credit office about someone else's claim.
When you take full responsibility for someone else's claim when they can't manage their own affairs – in this case you're an appointee
When you claim tax credits for your child who is under 16 and their baby, if they're both living with you. In this case, all tax credits will be paid to you.

To become an authorised intermediary, you must send a TC689 form to HMRC. Authorisation lasts for 12 months, and it usually takes two days for HMRC to process the form. The authorisation can be cancelled by writing to the tax credit office.

Appointees are usually used on behalf of people who are severely disabled or mentally incapable of dealing with their own tax credits. You can apply to become an appointee through the tax credit claim form, where you have to explain why the person can't complete and sign the form themselves.