What Is the Difference Between a Working Tax Credit and a Child Tax Credit?

by Andrea Ruiz ; Updated July 27, 2017

The Child Tax Credit and the Working Tax Credit are two types of government entitlement benefits programs in the United Kingdom. Contrary to what their titles may imply, neither program is related to the tax bills of the recipient. Instead, Her Majesty's Revenue and Customs credits an amount of money to eligible households and distributes them in 12 equal monthly payments throughout the fiscal year. The two kinds of benefits have many similarities, but they are different in scope and purpose, as well as in the populations they serve.

Child Tax Credit

The Child Tax Credit is a monthly benefits allowance for households responsible for at least one dependent minor child. Recipients are entitled to this payment regardless of their tax liability; that is, they may receive the credit even if they haven't worked or paid taxes. Anyone age 16 or older and responsible for 50 percent or more of a minor child's living expenses is eligible to receive the CTC.

Working Tax Credit

The Working Tax Credit, a national monetary entitlement program, pays low-income working recipients a monthly benefits allowance. HMRC determines the amount of this allowance by analyzing the total taxable wages the recipient reported in the prior year. Based on income, household size and allowable living expenses such as rent and food, the HMRC determines an annual amount it must credit back to the household in one lump sum total.

Recipients of the credit do not receive the credited funds all at once. Low-income households whose total income falls below eligible limits instead receive a monthly allowance equal to one-twelfth of the yearly credit amount to which they are entitled.


To qualify for the Child Tax Credit, a household must include at least one child under the age of 20 living a majority of his time in the household. Income eligibility requirements don't exclude most middle-class families. Applicants with significant assets and annual incomes as high as £50,000 may apply for the CTC. As a result, nearly all households in the UK that have one or more dependent children qualify for the CTC. Families with infants under the age of one receive additional financial credits, as do families

In contrast, anyone whose income falls below the income limits can claim the Working Tax Credit, including single adults, seniors and childless couples. Eligibility criteria for the WTC includes a low- income requirement that is much more strict than that of the CTC.

To qualify for the WTC, a recipient must be working at least part-time. No such requirement exists for the CTC; any adult responsible for a minor child in the household may apply to receive the CTC, regardless of job status.

Claiming Both Credits at the Same Time

Individuals and families may receive both the CTC and the WTC at the same time. HMRC assesses a household's eligibility for the two credits at the same time, using the same application. HMRC reviews each household's eligibility on an annual basis, and it is possible that receiving both credits in one year puts a family over the income limit of eligibility for the next. However, the law only requires that recipients report changes in income status in excess of a £25,000 increase, so that many families still continue to legally claim both credits while being over the income eligibility requirements in subsequent years.

About the Author

Andrea Ruiz has written professionally for blogs, online entertainment magazines and television network websites for more than a decade. Ruiz has also been a web and social media developer, Internet business consultant and computer programmer since 1999, and worked for four years as a professional community manager. Ruiz holds a Bachelor of Arts from University of Massachusetts, Boston.