Is Working Tax Credit Taxable?
When trying to work out how much tax you need to pay, once you have taken into account the personal allowance that you are given which is the tax free amount that you can earn, you may have different sources of income and it is possible that not all of these sources are taxable.
If you are receiving Working Tax Credit and indeed Child Tax Credit, you may wonder if you have to pay tax on it.
The answer for this type of benefit is no, both Working Tax Credit and Child Tax Credit are not taxable benefits.
Therefore when calculating how much tax you need to pay, you can exclude any money that you get from these benefits in your calculations.
This may mean that you don’t have to pay much tax at all as you can earn up to £11,000 in the tax year 2016/17 before you have to pay tax on earnings on top of that.
The rules regarding different State benefits can be quite complicated as some benefits are actually taxable (including the State Pension) but it may be the case that tax is not deducted at source from these earnings.