Benefits Expert: Tax credits explained when working hours change

Q. My son is doing his GCSEs and will be finishing school for the summer.'¨He is going to college in September, but I am worried about my tax credits over the summer holidays as he won't be classed as a student at that time.'¨Is there anything else that I can claim for him while he is not studying?

A. Child Tax Credit can be paid for any child or qualifying young person who meets the conditions. Qualifying young people continue to be included for Child Tax Credit until August 31 following their 16th birthday, whether they are in education or not. Also, if he is enrolled on a course to start in September, then gaps between courses are ignored. This means that he will continue to be treated as a student and your tax credits shouldn’t change when he finishes his exams. For Child Benefit, a child continues to qualify until the terminal date after they finish education. The terminal dates are the last day in February, May 31, August 31, November 30, or the Sunday of the week that they turn 20.

Q. I usually work 28 hours per week and I get Working Tax Credit and Child Tax Credit, but over the summer holidays I only do 16 hours per week because my child is off school and I want to spend extra time with them. What will happen to my tax credits over the summer?

A. If working less hours over the summer is a regular pattern for you and you were expecting this to happen, then you should have been informed to tell HMRC about what earnings you expected to have across the whole year, taking into account the busier weeks and quieter weeks. When tax credits are calculated they use your income figures for the whole year, not weekly or monthly income. If you work, for example, 42 weeks doing 28 hours per week and 10 weeks doing 16 hours per week for £8 per hour, then your annual income would be: (8x28x42 = £9,408) + (8x16x10 = £1,280) = £10,688 and that income figure should be used to calculate your tax credits throughout the year. Claimants get more tax credits (wage dependant) when they do 30 hours per week as they get a 30 hours element included. As you won’t have that amount included in your calculations, your tax credits should actually stay the same all year round. The only change should be if you have any child care costs which change over the summer period.