Tax Credits - WFTC and DPTC
Replaced by Child Tax Credit and Working Tax Credit
Working Families' Tax Credit (WFTC) and Disabled Person's Tax Credit (DPTC) are administered by the Inland Revenue and replace Family Credit and Disability Working Allowance.
WFTC and DPTC - the former for low-income families with children and the latter for those with a disability are both intended to encourage claimants into work, or to work more hours, by removing the disincentives of 'lost' benefits. Both can include a childcare tax credit to help with the childcare costs of a working parent.
In most cases Credits are paid by employers, through the payroll.
The Inland Revenue will tell employers when to start paying tax credit, how much to pay (including a daily rate) and when to stop. Employee payslips have to show the relevant payment, specifically described as a tax credit.
If tax credit payments are stopped before the date originally notified, the employer must complete a Certificate of Payments and no further tax credits should be paid until instructions are received from the Tax Credit Office.
The employer is able to offset tax credits paid to employees against the aggregate PAYE tax, National Insurance Contributions (NICs) and student loan deductions (SL) due to be paid to the Inland Revenue each month or quarter, as appropriate.
If the total amount of tax credit to be paid on any pay day is likely to be more that the total PAYE, NICs and SL, the employer can apply for funding to cover the difference.
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