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HMRC internal manual

Tax Credits Technical Manual

From
HM Revenue & Customs
Updated
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Calculation of entitlement: Tax Credit Income Thresholds

Entitlement to tax credits is dependant on income thresholds and tapers.

The Tax Credits (Income Thresholds and Determinations of Rates) Regulations 2002, Reg 3(2)

For people entitled to WTC the threshold is £6,420 a year. People with annual income at or below this threshold will receive the maximum award to which they are entitled.

Those with income above the threshold will have their maximum award reduced by 41p for every pound of income above the threshold.

The Tax Credits (Income Thresholds and Determinations of Rates) Regulations 2002, Reg 3(3)

For families entitled to CTC only, the income threshold is £16,105.

Those whose income is above the threshold will have their maximum awards reduced by 41p for every pound of income above the threshold.

The Tax Credits (Income Thresholds and Determinations of Rates) Regulations 2002, Reg 3(3) & Reg 8 (step 4)

For families entitled to CTC and WTC, the income threshold for the relevant period is that amount; or

  • if greater, the lowest amount of income for the relevant period (found under step 3 above) which, (disregarding a nil to £26.00 pa award) would result in determining the reduction of the elements of the tax credit to nil for that period.