If you are working on a low income, as many liveaboard boaters are, make sure that you claim Working Tax Credit now, especially if you are self-employed. Working Tax Credit will be phased out next year. It will gradually be replaced with Universal Credit under the Government’s ‘welfare reform’ programme. No new claims for Working Tax Credit will be accepted after 5th April 2014. Self-employed people on low incomes will be considerably worse off under Universal Credit. You can claim Tax Credits if you are employed, self-employed or if you earn an income from both employment and self-employment.
Even if your income is too high to qualify at present, it is possible to make a ‘protective’ claim for Working Tax Credit if you anticipate that your income may drop after April 2014. The maximum amount of Working Tax Credit that a single person can claim is £2,710 per annum if they are working 30 or more hours per week and earning up to £6,420. If your income is between £6,420 and around £10,000 you can still claim a lower amount of Working Tax Credit. Parents can also claim Child Tax Credits; these will also be phased out.
Claims for Working Tax Credit should be made by post on a form which is available from the Tax Credits Helpline on 0345 300 3900. For more information on claiming Tax Credits see http://www.hmrc.gov.uk/taxcredits/start/claiming/get-started/how-to-claim.htm
The phasing out of Tax Credits is part of the Government’s welfare reform plans that will see most benefits and tax credits replaced by Universal Credit. This will operate very differently from the current benefit system. For example, it will involve some working claimants who currently receive Housing Benefit, Tax Credits and other benefits being subject to requirements to take steps to increase their income. Those who already receive Tax Credits and Housing Benefit will have their benefits gradually transferred to the new system between 2014 and 2017.
For more information on welfare benefits, Universal Credit and welfare reform see:
Citizens Advice http://www.adviceguide.org.uk/england/benefits_e.htm
Child Poverty Action Group http://www.cpag.org.uk/welfare-rights
Low Incomes Tax Reform Group http://www.litrg.org.uk/low-income-workers
Low Incomes Tax Reform Group Advisers Guide http://www.revenuebenefits.org.uk/tax-credits/transition-to-universal-credit/