What Working Tax Credit is and who still gets it
Working Tax Credit is a legacy benefit paid by HMRC to working adults on low incomes. It includes a basic element plus additions for childcare, disability, a 50-plus element and a severe disability premium.
New claims for Working Tax Credit have not been accepted for years. If you are not already receiving it, you cannot claim it now. New claims go to Universal Credit instead.
HMRC is closing all remaining Working Tax Credit and Child Tax Credit cases through a managed migration process. If you receive a migration notice, you have three months to claim Universal Credit before your tax credit payments stop.
WTC rates in 2026/27
Basic element: £2,500 per year. Couple and lone parent element: £2,570 per year. 30-hour element: £1,075 per year.
Disability element: £3,935 per year. Severe disability element: £1,705 per year. 50-plus element (25-29 hours): £1,310 per year.
Childcare element: up to 70% of eligible childcare costs, capped at £175 a week for one child or £300 for two or more. UC childcare support at 85% is more generous, which is one reason migration is being encouraged.
Income threshold and taper
Working Tax Credit starts tapering once annual household income exceeds £7,955. Above that level, the award reduces by 41p for every £1 of income above the threshold.
So a household on £15,000 per year with a basic WTC entitlement of £2,500 would see 41% of the £7,045 excess applied as a reduction: £2,888 reduction, leaving nil award.
Actual calculations are done annually by HMRC based on your reported income. If income changes significantly in year, you should report it to HMRC to avoid a large overpayment at renewal.
Migration to Universal Credit: what to expect
HMRC is issuing managed migration notices in batches. When you receive one, the clock starts. You have three months to make a new UC claim. If you do not claim in time, your tax credits will stop and you will receive nothing until you do claim.
When you claim UC after receiving a migration notice, you should receive transitional protection if your UC entitlement would be lower than your tax credit award. This top-up protects your income but erodes over time as your circumstances change.
If you are still on Working Tax Credit and have not received a notice, do not voluntarily switch to UC without getting independent advice first. Voluntary migration does not qualify for transitional protection.
WTC childcare element vs UC childcare support
WTC covers up to 70% of eligible registered childcare costs. UC covers up to 85%. For most families, UC childcare support is more generous.
The maximum UC childcare support is £1,071.09 per month for one child or £1,836.16 for two or more. WTC caps at £175 or £300 per week depending on the number of children.
This difference is one reason DWP and HMRC are pressing ahead with managed migration. Most families with children are better off on UC when assessed on an equivalent basis.