Child Tax Credit vs Child Benefits: what's the difference?

Child Tax Credit and Child Benefits are terms which are sometimes used interchangeably; however, they refer to different payments. Understanding the intricacies of both can help parents and caregivers access the financial support they need.

So, we’ve created a guide filled with everything you need to know. We’ll answer your burning questions on Child Tax and Child Benefits. We’ll also dive into their main differences, as well as their pros and cons.

What is Child Tax Credit?

Put simply, Child Tax Credit is a payment made by HMRC to support families with children. It is a form of income-related support, given to families with children or qualifying young people (between the ages of 16-19), who are in non-advanced, full-time education, or approved training.

Child Tax Credit is paid independently of Child Benefit, and you can only claim it if you receive Working Tax Credit, or if you have claimed Child Tax Credit in the past year.

This means-tested benefit can help give families an additional source of income, and it can be claimed by all parents and carers who are responsible for at least one young person.

Who qualifies for Child Tax Credit?

Child Tax Credit is paid until the month of September after your child turns 16. Or, you can continue claiming Child Tax Credit if your child is under 20 and in full-time non-advanced education or training.

Also, Child Tax Credit can be claimed for 16–17-year-olds who don’t fit into either of these categories, but do work less than 24 hours a week, and are registered with their local careers service.

How much will I receive?

The amount you’ll receive is based on your income, the number of children you’re responsible for, and whether any of your children have a disability. Below we’ve outlined the maximum annual tax credit rates (2024-25), considering different circumstances:

  • Family element: The basic amount for families with one or more children, is £545 per year.

  • Child element: paid for each child, £3,455 per year.

  • Disability element: paid for each child with a disability, £4170 per year.

  • There’s also a severe disability element which is £1680 per year.

The amount you’ll receive varies from family to family. Also, Child Tax Credit has a two-child maximum for children born after 6th April 2017. This two-child limit means in most cases, you’ll only receive the ‘child element’ for a maximum of two children or young people.

Equally, the higher your income, the less Child Tax Credit you’ll receive. For maximum Child Tax Credit payments, your income will be less than £19,995 (2024-2025 tax year).

It’s also important to note that if you cannot apply for Child Tax Credit, you should be able to apply for universal credit instead.

What are Child Benefits?

Wondering about Child Benefit payments and Child Benefit eligibility? Well, Child Benefit is a standalone payment, and you can claim it at the same time as Child Tax Credits.

Child Benefit is a payment which families in the UK can claim for their children, including some 16–19-year-olds in non-advanced, full-time education or training. It is usually paid to families every four weeks (however in some cases it can also be paid weekly).

Contrary to Child Tax Credit, Child Benefit is not a means-tested payment. This means that anyone can claim it, no matter your income or earnings.

There are exceptions, however, for instance, those earning over £60,000 a year will incur a ‘high-income charge’ when claiming.

Additionally, if you receive Child Benefits and are out of work, you may also qualify for other benefits.

Who is eligible for Child Benefits?

Anybody responsible for a child under the age of 16, or under 20 (in approved education or training) is eligible to receive Child Benefits.

Being responsible for a child is usually defined as:

  • Living with that child, for instance, a parent or primary caregiver.

  • Paying at least the same amount you’d be receiving in child benefit towards looking after a child. For instance, for clothing, food, and general living expenses.

For further information on Child Benefits or to make a claim, simply visit the Gov. uk website.

How much will I receive?

Child Benefit is widely seen as a boost to your family’s monthly budget. And the amount you receive will depend on how many children you care for.

For instance, in the 2024-25 tax year, a payment of £25.60 a week will be received weekly, for an eldest or only child. Then, you’ll receive £16.95 for any additional children.

So, if you have two children, you could claim £42.55 weekly in child benefit, or £2,212.60 annually! This rises to £4,856.80 if you’re responsible for 5 children.

Can I get both payments at the same time?

Yes, you can receive both Child Tax Credits and Child Benefit payments simultaneously. So, it’s important to carefully consider your unique situation and make sure you’re receiving the payments you’re eligible for.

Also bear in mind that eligibility criteria may change, so you’ll need to keep up to date with the GOV.UK website for all the latest information.

With a family, it’s important to have an emergency fund in place which you can fall back on, so why not read our guide on how to save for an emergency fund? We’ve also got handy insights on saving on your monthly expenses which you might find useful, especially if you have a larger family!

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