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How to calculate your income when applying for Working Tax Credit?

Working Tax Credit is a benefit which is currently helping over two million households in the area of the United Kingdom. This is a governmental way of help specifically designated for those who need extra help to top their current income off with becauset heir wage is below a stated minimum (GBP 14.000 in case of one individual applicant and GBP 19.000 in case of a couple applying jointly) the working hours should be either 30 hours per week per individual or 16 hours /week in case the applicant is raising a child alone.

What do you need for application?

  • Tax paper from last year – the total amount of gross income ( still including all taxes and the amount of National Insurance not yet deducted)
  • Calculation of the current tax year: in case applicant is sure in the total amount being either substantially lower or substantially higher the deduction or addition of GBP 2500 is required for the base calculation.

How to count the income?

The best help ever is to get hold of your last year’s tax papers. If you don’t find your own copy you can still get help in the tax centre if you show address proof or get the HMRC in your area to get it for you.

Total wage:

total gross income

Employee benefits:

Any goods or extra money you’ve been paid.

Tips only to be included if they are not already part of your salary

Severance payment: Only if the total amount exceeds GBP 30.000

Earnings from outside the UK: Always to be included in British Pound

Deductible amounts:

Maternity, paternity benefits - up to a maximum of GBP 100/ week (if one got more still include GBP) 100

The below only to be included if you weren’t reimbursed:

  • Work expenses
  • Fees and official subscriptions
  • Liabilities and insurance payments
  • Agency fees
  • Maintenance costs

Extras - always include the gross amount

  • Pension benefits
  • Donations to any charity via Gift Aid

Of course this all depends on the applicant’s exact situation. For the Self Employed just use the total gross amount featured on the Self-Assessment Tax Return Form.

Other income may include the following:

  • State pensions
  • Occupational or other personal pensions
  • Interest on savings
  • Income on investment
  • Income on property – renting out property
  • Income on any sorts of trusts, estates or other settlements
  • Foreign income – any sum that can be considered income in the area of the UK, earned outside the UK

Sums not to enlist or count in as an income:

  • Tax credits
  • Student loan
  • Student grant
  • Income received in the name of your children

Finally if you find it all too problematic as the help of your local tax office or hire a bookkeeper to count this all out for you.