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Tax Credits: Disability Elements

The tax credits system ended on 5 April 2025. It is possible that people may still be entitled to tax credit disability element payments for 2024/25 and earlier years if they, their partner or their child have been waiting for a decision to be made on a qualifying disability benefit, they had a tax credit claim in those earlier years and the disability benefit is backdated to cover periods in 2024/25 and earlier years. 

Disability element of Working Tax Credit

The disability element was important. If a claimant didn't have responsibility for children, or was aged 60 or over, it meant they could claim working tax credit by working at least 16 hours rather than 30. If the claimant was part of a couple and had responsibility for a child or children, it meant they could continue to qualify for WTC by working at least 16 hours rather than 24 hours as required for most couples from 6 April 2012. In addition, it increased the maximum award of tax credits.

Tax Credits were calculated on a daily basis. To get the disability element, the claimant had to meet all three conditions below for each day of their claim.

CONDITION 1: The claimant must have worked at least 16 hours a week

The disability element was only for those who were working. If the claimant was part of a couple, and one of them was disabled but not working, they would not get the disability element included. If they both met all three conditions, they would qualify for two disability elements.

CONDITION 2: The disability must have placed them at a disadvantage in getting a job

The meaning of this expression, in tax credits terms, was that they had to have one of a number of disabilities which HMRC set out in a list. You can find that list on leaflet TC956 produced by HMRC. They must have met one of the descriptions on the list to pass this part of the test.

CONDITION 3: They must receive (in the year of the claim) or have previously received a qualifying benefit

Regulation 9 WTC (Entitlement and Maximum Rate) Regulations 2002, contained several sub-sections (Cases A-G) which set out what constituted a qualifying benefit. As shown below, there were several qualifying benefits, at least one of which they must have been receiving, or have received at some time in the recent past.

The benefits, and the rules for each, are set out below. The claimant didn't need to meet them all; as long as they met at least one of the bullet points below, they would satisfy condition 3.

From 6 April 2025, only Case C can lead to an amendment of an award. We have left information about the other ways of qualifying to help advisers who may be dealing with appeals.

NB - 'Training for work' meant training under certain statutory arrangements on a course whose primary purpose is the teaching of occupational or vocational skills. The claimant must have attended for at least 16 hours a week.

Condition 3 could also be satisfied by qualifying under Case E often called the ‘fast track’ rules. Although it was called the fast track, it required them to be off work sick for quite a long time and be in receipt of certain benefits during that time to qualify.

To meet the fast track rules all three numbered points below had to be met:

  1. (a) on account of their incapacity for work, they received statutory sick pay, occupational sick pay, short term incapacity benefit payable at the lower rate or income support, for a period of 140 days where the last of those days fell within the previous 56 days or they have been credited with Class 1 or 2 National Insurance contributions for at least 20 weeks where the last of those weeks fell within the previous 56 days.

    OR

    (b) on account of their incapacity for work or having limited capability for work they received an employment and support allowance or any of the pay or benefits in paragraph (a) above, for a period of 140 days where the last day fell in the previous 56 days or they have been credited with Class 1 or Class 2 contributions on account of having incapacity or limited capability for work for a period of 20 weeks where the last of those weeks fell within the previous 56 days.
     
  2. The claimant had a disability that was likely to last for at least six months, or for the rest of their life if their illness is terminal and they are were not expected to survive for six months.
     
  3. Their gross earnings had dropped by at least 20% following their disability, with a minimum reduction of £15 per week.

Severe disability element

This element was different to the disability element. Claimants could get this even if they didn't qualify for the disability element. This is because there was no requirement that the disabled person had to work to get this element so if the worker had a partner who didn't work but met the condition below, they would get the severe disability element included.

To qualify the claimant (or their partner) had to receive the highest rate care component of disability living allowance (DLA), the enhanced daily living component of personal independence payment or armed forces independence payment (AFIP) or the higher rate of attendance allowance (AA) or the higher rate daily living components of Scottish disability assistance. As it was part of WTC, at least one person had to be working (although, unlike the disability element, the disabled person did not need to be the worker).

If they got the highest rate care component of DLA, enhanced daily living component of PIP or AFIP, the higher rate daily living component of Scottish disability assistance, or the higher rate of AA, but payment was suspended whilst they were in hospital, they will still qualify for the severe disability element.

Only the highest rate of the care component of DLA, enhanced daily living component of PIP, or the higher rate of AA, gave entitlement to the severe disability element. If they received the care component of DLA at any other rate, or the mobility component, even at the higher rate, they would not qualify for this element. Similarly if they received the standard care component of PIP or the mobility component, even at the enhanced rate, they would not qualify for this element.

If the claimant was part of a couple and both of them met the conditions, they could get two severe disability elements included in their WTC claim.

Children and disability

Prior to 6 April 2017, there was no separate child disability element. The child element was payable at one of three rates that reflected disability and severe disability. However it was common for everyone, including HMRC, to refer to a disabled child element and severely disabled child element.

Due to the introduction of the two child limit from 6 April 2017, the legislation was amended to create a child disability element.

The CTC disability element was payable at two rates:

These two rates were often referred to as different elements but they were in fact one element, payable at two different rates.

The disabled element was payable for as many children on the claim who qualified and is not subject to the two child limit.

Disabled child

The disability element was paid for each disabled child or QYP that a claimant was responsible for, irrespective of the two child limit policy and whether or not a basic child element was paid for the child.

A child or QYP was disabled for tax credit purposes if any rate of DLA, child disability assistance (Scotland) or Personal Independence Payment (PIP) was payable for the child or QYP, or had ceased to be payable solely because they were a hospital in-patient.

A child or QYP also qualified if they were certified as severely sight impaired or blind by a consultant ophthalmologist, or had ceased to be registered or certified as blind within the 28 weeks immediately preceding the date of claim.

Severely disabled child

The CTC disability element was paid at a higher rate for each severely disabled child or QYP that a claimant was responsible for.

A child or QYP was severely disabled for tax credit purposes if the highest rate care component of DLA, the higher rate of disability assistance (in Scotland), the enhanced rate daily living component of Personal Independence Payment (PIP) or any component of Armed Forces Independence Payment (AFIP) was payable for them, or would have been payable but for a suspension or abatement due to hospitalisation.

Note: if a new claim for DLA/PIP or AFIP was made whilst a child was in hospital, it could not be paid until the child was discharged. However, notification still needed to be made to HMRC of any qualifying disability elements because the CTC severe disability element could have been included whilst the child was in hospital, even though DLA had never been in payment. The same did not apply to the CTC disability element.

It was the claimant’s responsibility to notify HMRC if DLA (or any other disability benefit) was awarded for their child/young person. HMRC did receive data from DWP when DLA is awarded for a child, however HMRC have stressed this is a back-up system and in some cases it has failed meaning some people may not have received the extra amounts they were entitled to. You can read more about this following an announcement in the Autumn Statement 2016 on our blog.

Backdating the disability elements 

Usually, changes of circumstances could generally only be backdated up to a maximum of one month (3 months prior to 6 April 2012). However, longer backdating is possible in relation to the disability elements in certain circumstances.

Backdating is possible by more than 1 month where entitlement to one of the disability elements is dependent upon an award of a qualifying benefit. The rules for backdating disability elements changed on 6 April 2009 and further changes were made in January 2021 to clarify the rules.

Broadly, where the claimant notifies HMRC that they have been awarded a qualifying disability benefit within a month of the benefit decision, such that they meet the conditions to have any of the disability elements included in their tax credit award, the relevant additional disability elements can be added to their tax credits award. They will be added with effect from the date the qualifying benefit was awarded

The rules about longer backdating for disability elements have always been in existence but in 2020, HMRC concluded that they did not have full legislative cover to apply the backdating rules where the longer backdating required a change to a finalised award, ie the backdating reached back into previous tax years. For this reason, the legislation was changed to clarify the powers with effect from 15 January 2021 and the longer backdating is now applied under Section 21C of the Tax Credits Act.

Prior to 6 April 2009, if there was an ongoing tax credits award, the claimant had to notify HMRC both when they applied for the qualifying benefit and then again within 3 months of it being awarded in order to receive backdating of more than 3 months.

Example of the rules (since 6 April 2009)

Sandra was already claiming child tax credit for her daughter, Amy. If Sandra applied for Disability Living Allowance for Amy in April 2020, and it was not awarded until October 2022 providing Sandra told HMRC of the award of DLA within 1 month she can receive backdating of the disability element to April 2020. She was not required to tell HMRC in April 2020 when she first applied for the DLA.

It is also possible to get backdating where a tax credit claim has ended and the disability benefit decision is made later. This only applies if the disability benefit decision start date falls into a period covered by a tax credit award:

Example of the rules where a tax credit award ended

Jemma applied for DLA for her son in May 2022. DWP said she was not entitled and she appeals. While waiting for her appeal, she claims UC in May 2024. Her tax credits end the day before her UC claim. In November 2024, she is successful at appeal and her son is awarded DLA from May 2022. As long as Jemma contacts HMRC within one month of the DLA award, she should receive backdated child tax credit covering the period May 2022 to May 2024.

New claims

Apart from the exception for a small number of people who are granted refugee status in certain circumstances, it is no longer possible to make a new claim for tax credits.

When it was possible to make a new claims for tax credits, backdating was limited to a maximum of 31 days. However there was an exception to this in cases where a qualifying disability benefit was needed in order to establish entitlement to WTC. In those cases, as long as the claimant claimed WTC within 1 month of the award of the qualifying disability benefit, the WTC could be backdated to the first day of the disability benefit award (assuming the other conditions for entitlement to WTC were met during that period).

Sharing of information between HMRC and DWP

There are occasions where DWP share information with HMRC about qualifying disability benefits for tax credit claimants. HMRC say they have arrangements to receive this kind of information from DWP approximately monthly. Where HMRC receive this relevant information from DWP, they can amend the tax credit award, under s16 of the Tax Credits Act, to include any qualifying disability elements. If this happens and HMRC change a tax credits award due to notification by DWP but not notification by the claimant, they will not backdate the change earlier than 6 April in the current year, ie they will not review an award from any previous year that has been finalised. HMRC will send a fresh award notice to the claimant for the current year to tell them about the change to their award. This does not override the claimant’s responsibility to notify the change of circumstances and longer backdating can still be applied if the claimant notifies HMRC within a month of their benefit decision, even if their current year award has already been changed. It is not clear to what extent this data sharing will continue from 6 April 2025. 

It is, therefore, very important that claimants who have been waiting some time (or at least where the wait crosses over a tax year) for a decision about a qualifying disability benefit and, once it is awarded, qualify for any tax credit disability elements, contact HMRC within 1 month of getting their benefit decision to make sure they don’t lose out.

Backdating from 6 April 2025

No tax credit awards are in payment after 5 April 2025 as the tax credits system has closed down. However if the claimant is still waiting for a decision on one of the qualifying disability benefits that would entitle them to the disability or severe disability elements (or both) in WTC or CTC, they may be entitled to the disability element for 2024/2025 and earlier periods. This may be the case where the start date of that disability benefit goes back to a time when they were entitled to tax credits. They must notify HMRC within one month of the date their disability benefit decision was made and, if they do, HMRC will re-calculate the previous tax credit awards and pay any money owed where it leads to a higher award. HMRC say they will usually look to offset any underpayments against any tax credit overpayments. The newly recalculated award may also be sent to DWP which could lead to a recalculation of any transitional protection in place.

Last reviewed/updated 10 April 2025