Raising kids is costly work, not only on time (and your mental state as you endure one too many sleepless nights) but also when it comes to money. The average cost of raising a child has been worked out at £231,843, which can come as a shock to most parents just starting out!
However, if you do have a low income there is help available with the costs of raising a child, in the form of child tax credits. Perhaps you don’t know what these are exactly – if so here’s a quick explanation from the Money Advice Service:
‘Child Tax Credit is a benefit to help with the cost of raising a child. You may be able to get it if you’re over 16 and responsible for a child who is either:
- Under 16
- Under 20 and in full time education or training’
You can read the full description here.
When you apply for child tax credits your income will be taken into account, as well as the income of your partner. Therefore, as a rough guide if you and your partner earn up to £40,000, have one child and are paying childcare costs then you could obtain child tax credits.
For those not paying childcare costs, if you earn up to £25,000 and have one child you can apply for tax credits. If your child has a disability, this is also taken into consideration and you may receive further help.
The amount you can receive from child tax credits varies per family but you could enjoy a basic amount of up to £545 a year and extra amounts – known as elements – can be added to this but this depends on your circumstances.
It’s important if you begin receiving child tax credits that you renew your claim every year to ensure you continue benefitting from them. It’s also essential that you update the Tax Credit Office of any changes to your circumstances, to ensure you are being paid the right amount – this could mean anything from an income change to your child leaving home.
Bear in mind that from April 2017 the Government has plans to limit the amount of support you can receive for your first two children. The scheme itself is also being phased out and in its place there will be Universal Credit which is a single payment for those on a low income or out of work and covers all aspects of tax credits – from Child Tax Credits to Housing Benefit.