WTC2

A guide to Child Tax Credit and Working Tax Credit

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Contents

1 Introduction Page3

2 ChildTaxCredit Page5

3 WorkingTaxCredit Page8

4 Incomeandcapital Page21

5 Howyourawardisworkedout Page26

6 Helpandadvice Page32

7 Examplesoftaxcreditscalculations Page36

8 UniversalCreditandtaxcredits Page46

9 Yourrightsandobligations Page46

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Ffoniwch 0300 200 1900 i dderbyn fersiynau Cymraeg o ffurflenni a chanllawiau.

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1 Introduction

Thereare2taxcredits,ChildTaxCreditandWorkingTaxCredit.

Thisguideexplainsindetailwhattheyare,whoiseligibleandhowtoclaim.

Ifyou’reresponsibleforchildrenorareworkingasanemployeeoraself-employedperson,youshouldfindoutmoreabouttaxcredits.

Theclaimformincludescomprehensiveguidancenotes.

ChildTaxCreditandWorkingTaxCreditdon’taffectChildBenefitpayments,whichwepayseparately.

ChildTaxCreditsupportsfamilieswithchildren.Thiscanincludechildrenuntiltheir16thbirthdayandyoungpersonsagedfrom16butunder20yearsold.Youcanclaimwhetherornotyou’reinwork.

Theamountyougetisbasedonyourincome.Asaroughguide,youmaygetanawardofChildTaxCreditifyouhave:•onechildandahouseholdincomeofuptoabout£26,200•2childrenandahouseholdincomeofuptoabout£32,900

It’simportanttoknowthatthesefiguresareaguideonly.Dependingonyourcircumstancesyoumaystillqualifyifyourhouseholdincomeishigher.Forexample,ifyou’reclaimingformorethan2childrenorhaveachildwithadisability–readtheinformationinthetableonpage7.

WorkingTaxCreditisforworkingpeopleonalowincomeandisbasedonthehoursyouworkandgetpaidfor,orexpecttogetpaidfor.Youcanclaimwhetheryou’reanemployeeoraself-employedperson.Unpaidworkdoesn’tcountforWorkingTaxCredit.Youmayalsobeabletogethelpwithchildcarecosts.

A From 6 April 2017, the following changes apply: • the individual child element of Child Tax Credit will no longer be awarded for third

and subsequent children or qualifying young persons in a household, born on or after 6 April 2017, there are exceptions, for more information go to www.gov.uk/hmrc/ctc-exceptions

• the family element of Child Tax Credit will only be payable if you’re responsible for a child or qualifying young person born before 6 April 2017

The 2 child limit doesn’t apply to the childcare element of Working Tax Credit or the disability element of Child Tax Credit. You can claim these 2 elements for all children who meet the conditions.

For more information, go to GOV.UK and search for WTC5 (childcare element) or TC956 (child disability element)

To ensure you don’t miss out on what you’re entitled to, you should still report the birth of a child and any changes involving your children or young people, even if you won’t get the child or family elements for them.

WhoiseligibleToqualifyfortaxcredits,youmustbeaged16oroverandusuallyliveintheUnitedKingdom(UK),thatis,England,Scotland,WalesandNorthernIreland.TheUKdoesn’tincludetheChannelIslandsortheIsleofMan.Shortabsencesofupto8weeks,orinsomecases12weeks,won’taffectyoureligibility.

ForChildTaxCredityoumusthavetherighttoresideintheUK.

More information about Child Tax Credit is on page 5 and Working Tax Credit on page 8.

Phone the Tax Credit Helpline on 0345 300 3900 if you need any more help.

For more information for people arriving to live or work in the UK and the exceptions, go to www.gov.uk/tax-credits-if-moving-country-or-travelling

Or, phone the Tax Credit Helpline on 0345 300 3900.

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Somepeoplemaybeeligibleeveniftheydon’tliveintheUK.Forexample,ifyouliveoutsidetheUKbutyou,oryourpartnerifyouhaveone,areanationalofanothercountryintheEuropeanEconomicArea(EEA),orofSwitzerlandandyou:•workintheUK•areaCrownservantpostedoverseasortheiraccompanyingpartner•liveintheEEAorSwitzerland,andget –UKStatePension –contribution-basedEmploymentandSupportAllowance –IndustrialInjuriesDisablementBenefit –Widow’sBenefitorBereavementBenefit –IncapacityBenefit –SevereDisablementAllowance

CountriesintheEuropeanEconomicAreaare:

Austria Greece NorwayBelgium Hungary PolandBulgaria Iceland PortugalCroatia Ireland RomaniaCyprus Italy SlovakiaCzech Republic Latvia SloveniaDenmark Liechtenstein SpainEstonia Lithuania SwedenFinland Luxembourg United KingdomFrance MaltaGermany Netherlands

Youmaynotbeentitledtotaxcreditsifyou’resubjecttoimmigrationcontrol,buttherearesomeexceptions.

Immigrationcontrolmeans:•theHomeOfficegivesyoupermissiontostayintheUK(knownas‘leave

toenterorremain’),butthispermissionisgiventoyouonthegroundsthatyoudon’tclaimcertainbenefits,taxcreditsorhousingassistancepaidbytheUKgovernment(knownas‘norecoursetopublicfunds’)

•youneedpermissiontostayintheUK,againknownas‘leavetoenterorremain’,butyoudon’thaveit

•you’vebeenrefusedpermissiontostayintheUK,butyouappealedagainstthatdecision,andyourappealhasn’tbeendecidedyet

•you’vebeengivenpermissiontostayintheUK,butontheconditionthatsomeoneelse,likeafriendorrelative,paysforyourupkeepandgivesyousomewheretolive

Sometimesifyou’resubjecttoimmigrationcontrolyoumightstillbeabletoclaimtaxcredits,forexample,ifyou’repartofacoupleandonlyoneofyouissubjecttoimmigrationcontrol.

Formoreinformation:gotowww.gov.uk/tax-credits-if-moving-country-or-travelling

• phoneourhelpline

ClaimingasacoupleorasinglepersonIt’simportantthatyouunderstandthedifferencesbetweenclaimingasasinglepersonandclaimingasacouple.Ifyougetthiswrong,youcouldbuildupanoverpaymentthatyoumayhavetopayback.Youmayalsohavetopayapenalty.

Youmustclaimasacoupleifyou’remarried,livingwithsomeoneasifyou’remarried,orinacivilpartnership.Youshouldstillmakeajointclaim

Also read the notes on page 9 about the couple element of Working Tax Credit.

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asacoupleevenifyou’relivingaparttemporarily.Forexample,oneofyouisworkingaway.

Ifyoudon’thaveapartner,youshouldmakeasingleclaimbasedonyourcircumstances.Ifyou’relegallyseparatedoryourseparationislikelytobepermanent,youshouldmakeasingleclaim.Forexample,you’reintheprocessofgettingdivorced.

HowtaxcreditsarepaidTaxcreditsarenormallypaidinarrears,directlyintoabank,buildingsocietyorPostOffice®cardaccount.

Ifyoualreadyhaveanaccount,givethedetailsontheclaimform.

Ifyoudon’thaveanaccount,anybank,buildingsocietyorthePostOffice®canadviseyouontheaccountstheyoffer.

2 ChildTaxCredit

ChildTaxCreditChildTaxCreditisapaymenttosupportfamilieswithchildren.Youcanclaimitifyou,oryourpartner,areresponsibleforatleastonechildorqualifyingyoungpersonwhousuallyliveswithyou.Youdon’thavetobeworkingtoclaim.Ifthechildorqualifyingyoungpersonlivewithanotherfamilyforpartofthetime,youandthatotherfamilyshoulddecidejointlywhowantstoclaimforthatchildorqualifyingyoungperson.Ifyou’vebothmadeaclaimforChildTaxCreditforthesamechildorqualifyingyoungpersonbutcan’tagreewhoshouldgettaxcreditsforthemwe’llhavetodecidewhichofyouhasthemainresponsibility.We’llthenpaythetaxcreditstothepersonwhohasthemainresponsibility.

Decidingwhohasthemainresponsibilitydependsonthefacts.Thenumberofdaysthechildorqualifyingyoungpersonliveswithyouisimportant,butthisisn’ttheonlyfactortoconsider.Ifyou’reunsurewhattolookat,youshouldphoneourhelpline.

Ifanotherfamilymakesaclaimforthesamechildorqualifyingyoungperson,youmaybeaskedtoprovidedetailsofwhyyouthinkyouhavethemainresponsibilityforthem.We’llconsiderthese,togetherwiththedetailsprovidedbytheotherperson.Ifyoucan’tagreebetweenyourselveswhoshouldclaimforthatchildorqualifyingyoungperson,we’lldecidewhohasthemainresponsibilityforthem.

Ifyoudon’tagreewithourdecision,youcanaskustolookatitagain.Wecallthis‘mandatoryreconsideration’.OurleafletWTC/AP,‘WhattodoifyouthinkyourChildTaxCreditorWorkingTaxCreditiswrong’containsmoreinformationonthis.

GotoGOV.UKandsearchforWTC/AP.

Ifyoudon’thaveinternetaccess,phonetheTaxCreditHelplineon03453003900.

You can be entitled to Child Tax Credit for a young person aged 16, 17, 18 or 19 who is in full-time non-advanced education.

Full-time non-advanced education will usually be in a school or college but may also include education provided at home, if the child was receiving this education before their 16th birthday and the home schooling had previously been approved.

By full-time, in this situation, we mean an average of more than 12 hours supervised study a week, during term time, not counting breaks for meals and homework.

In England full-time non-advanced education could also take place other than at a school. Here full-time would include a study programme that is delivered to a person for at least 540 hours in any 12 month period. It could also include traineeship, a condensed study programme in England which could last between 6 weeks and 6 months.

We don’t mean courses or education provided by an employer or as part of a job contract.

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YoucanusuallygetChildTaxCreditforachildwholiveswithyouuntil31Augustaftertheir16thbirthday.Afterthisyoucanstillclaimforaqualifyingyoungpersonaslongasthey’reunder20.Thisisprovidingtheyenrolled,acceptedorstartedfull-timenon-advancededucationorapprovedtrainingbeforeage19.

Ifthequalifyingyoungpersonisaged16or17,andhasleftfull-timenon-advancededucationorapprovedtraining,youmaybeabletogetChildTaxCreditforthemforupto20weeksaftertheyleft.Toqualifyfortheseextraweeks,theyneedtohaveregisteredforworkortrainingwith:•acareersservice,Connexions,localauthoritysupportserviceorsimilar

organisation(inNorthernIreland,theDepartmentfortheEconomyandtheDepartmentforCommunitiesoranEducationandLibraryBoard)

•theMinistryofDefence,ifthey’rewaitingtojointhearmedforces•anycorrespondingbodyinanothermemberstate

Togettheseextraweeks,youmustclaimwithin3monthsofyourchildleavingeducationortraining.

Youcan’tgetChildTaxCreditforachildorqualifyingyoungpersonifthey’re:•aged16oroverandaregettingIncomeSupport,income-based

Jobseeker’sAllowance,EmploymentandSupportAllowance,taxcreditsorUniversalCreditintheirownright

•aged16orover,haveleftfull-timenon-advancededucationorapprovedtraining,registeredwithaqualifyingbody,butthenstartedpaidworkfor24hoursormoreaweekduringthe20weekextensionperiod

•servingacustodialsentenceofmorethan4monthsimposedbyacourt

Specialrulesapplywherechildrenareplacedwithyoubythelocalauthorityandyou’regettingpublicfundsforlookingafterthem.Formoreinformation,phonetheTaxCreditHelplineon03453003900.Youshouldalsophoneourhelplineifachildorqualifyingyoungpersonhascomefromabroadandisstayingwithyouforeducationalpurposes.

HowChildTaxCreditismadeupChildTaxCreditcontainsseveralelements.Thevalueofeachislistedbelowbuttheamountyougetdependsonyourincome.

Element Annualamountfor2018to2019(£)

Familyelement(oneperfamily) 545

Childelement(paidforeachchildorqualifyingyoungperson) 2,780

DisabilityelementofChildTaxCredit,wherethechildorqualifyingyoungpersonisdisabled(paidinadditiontothechildelement)

3,275

DisabilityelementofChildTaxCredit,wherethechildorqualifyingyoungpersonisseverelydisabled1(paidinadditiontothechildelement)

4,600

1Shownas2separateelementsonyourAwardNotice-Disabilityelementof£3,275andSevereDisabilityelementof£1,325totalling£4,600.

Examples of full-time non-advanced education are:

• GCSEs, A levels and other general academic qualifications of a similar standard, for example, iGCSEs, Pre-U and the International Baccalaureate

• NVQ level 1, 2 or 3

• BTEC National Diploma, National Certificate and 1st Diploma

• National 4 and 5 (Scotland)

• SVQ level 1, 2 or 3

• Scottish Group Awards

About approved trainingYou can be entitled to Child Tax Credit for a young person aged 16, 17, 18 or 19 who is in approved training which isn’t provided by a contract of employment. Training is approved if it’s provided under one of the following programmes.

In Scotland – The Employability Fund.

In Wales – Foundation Apprenticeships or Traineeships.

In Northern Ireland - PEACE IV Children and Young People 2.1 or Training for Success.

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Youmaygetadisabilityelementof£3,275foreachchildorqualifyingyoungpersonyou’reresponsibleforif:•DisabilityLivingAllowance(DLA)orPersonalIndependencePayment

(PIP)isbeingpaidforhimorherorwouldbesopayablebutforhospitalisationofthechildorqualifyingyoungperson

•thechildorqualifyingyoungpersoniscertifiedasseverelysightimpairedorblindbyaconsultantophthalmologist

•thechildceasedtobecertifiedasseverelysightimpairedorblindbyaconsultantophthalmologistinthe28weeksbeforethedateofyourclaim

Youmaygetadisabilityelementof£4,600foreachchildorqualifyingyoungpersonyou’reresponsibleforifthey’repaideither:•DLA(highestratecarecomponent)orwouldbesopayablebutfor

suspensionofthebenefitorhospitalisationofthechildorqualifyingyoungperson

•enhanceddailylivingcomponentofPIPorwouldbesopayablebutforhospitalisationofthechildorqualifyingyoungperson

•ArmedForcesIndependencePayment

A From 6 April 2017, the following changes apply: • the individual child element of Child Tax Credit will no longer be awarded for

third and subsequent children or qualifying young persons in a household, born on or after 6 April 2017, there are exceptions, for more information go to www.gov.uk/hmrc/ctc-exceptions

• the family element of Child Tax Credit will only be payable if you’re responsible for a child or qualifying young person born before 6 April 2017

The 2 child limit doesn’t apply to the childcare element of Working Tax Credit or the disability element of Child Tax Credit. You can claim these 2 elements for all children who meet the conditions.

For more information, go to GOV.UK and search for WTC5 (childcare element) or TC956 (child disability element)

To ensure you don’t miss out on what you’re entitled to, you should still report the birth of a child and any changes involving your children or young people, even if you won’t get the child or family elements for them.

HowmuchyoucangetChildTaxCreditispaidinadditiontoChildBenefit.TheamountsofChildTaxCreditareshownbelowinpounds.

Annualincome(£) Onechild/qualifyingyoung

person

2children/qualifyingyoung

persons

3children/qualifyingyoung

persons

Noincome 3,330 6,110 8,890

5,000 3,330 6,110 8,890

8,000 3,330 6,110 8,890

10,000 3,330 6,110 8,890

15,000 3,330 6,110 8,890

20,000 1,730 4,515 7,295

25,000 0 2,465 5,245

30,000 0 415 3,195

35,000 0 0 1,145

40,000+ 0 0 0

The table opposite shows how much money you could get for the tax year 6 April 2018 to 5 April 2019 if you can’t get Working Tax Credit. You could get more if you’re in work. The first figure in each column shows the maximum amount available and goes down as your income (or joint income, if you’re part of a couple) goes up.

If your child has a disability, the amount you can get will be higher.

Using this table, if your income is £15,000 a year and you have 2 children but aren’t eligible for Working Tax Credit, you could get an annual Child Tax Credit award of £6,110, equivalent to £117.50 a week.

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ChildTaxCreditwillbepaiddirectlytothemaincarerforallthechildreninthefamily.Ifyou’repartofacouple,you’llneedtotelluswhichofyouisthemaincarerforthechildren.Ifyou’reasingleparent,thiswillbepaiddirecttoyou.Youcanchoosewhethertogetpaymentsweeklyorevery4weeks.

Paymentswillnormallybemadeintoabank,buildingsocietyorPostOffice®cardaccount.

Ifyou’regettinganotherbenefitYou’reentitledtothemaximumamountofChildTaxCreditforyourchildrenifyouget:•IncomeSupport•income-basedJobseeker’sAllowance•income-relatedEmploymentandSupportAllowance•PensionCredit

3 WorkingTaxCredit

WorkingTaxCreditWorkingTaxCreditisforworkingpeopleonalowincome.Youcanbeemployedorself-employed,andyoudon’thavetohavechildrentoclaim.Inallcasesyouhavetobeeither:•working(whetherinemploymentorself-employment)whenyoumake

yourclaim•startingpaidworkwithin7daysofmakingyourclaim

Youmaygetmoreifyouhaveadisabilityorareresponsibleforchildrenandhavechildcarecosts.

WorkingTaxCreditispaiddirectlytothepersonwhoisworking.

ThechildcareelementofWorkingTaxCreditispaiddirectlytothemaincarerofthechildorchildrenalongwithChildTaxCredit.

HowWorkingTaxCreditismadeupWorkingTaxCreditcontainsseveralelements,includingadditionalamountsfor:•workingpeoplewithadisability•peoplewithaseveredisability•thecostsofregisteredorapprovedchildcare

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Themaximumvalueofeachelementislistedbelow,buttheamountyougetdependsonyourincome.

ElementAnnualamountfor2018to2019(£)

Basicelement(onepersinglepersonorcouple) 1,960

Coupleelement2(paidinadditiontobasicelementbutonlyonecoupleelementallowedpercouple)

2,010

Loneparentelement(paidinadditiontobasicelementforsinglecustomerswhoareresponsibleforachildorqualifyingyoungperson)

2,010

30-hourelement3(paidinadditiontootherelementsbutonlyone30-hourelementallowedpercouple)

810

Disabilityworkerelement1(paidinadditiontootherelements) 3,090

Severedisabilityelement1(paidinadditiontootherelements) 1,330

Childcareelement,maximumeligiblecostforfamilieswithchildcareforonechild

£175 a week

Childcareelement,maximumeligiblecostforfamilieswithchildcarefor2ormorechildren

£300 a week

Percentageofeligiblechildcarecostscovered 70%

Notes

1 If the claim is a joint claim and you’re both entitled to any of these elements, the award will include 2 elements per couple.

2 If you’re in a couple and one of you is subject to immigration control, and you’re not claiming for any children, you won’t normally be able to get the couple element. But you still need to make a joint claim.

3 The 30-hour element is available to those working 30 hours or more per week.

WorkinghoursYouusuallyneedtobeworkingaminimumnumberofhoursaweektoclaimWorkingTaxCredit.

Ifyou’reresponsibleforachildorqualifyingyoungpersonandyou’renotpartofacouple,youcanclaimWorkingTaxCreditifyou:•areaged16orover•workatleast16hoursaweek

Ifyou’reresponsibleforachildorqualifyingyoungpersonandyou’repartofacouple,youcanclaimWorkingTaxCreditifyou’rebothaged16oroverand:•youworkatleast24hoursaweekbetweenyou,withonepartnerworking

atleast16hoursaweek•onepartnerworksatleast16hoursaweekandqualifiesforthedisability

elementofWorkingTaxCredit•onepartnerworksatleast16hoursaweekandisaged60orover•onepartnerworksatleast16hoursaweekandtheotherpartnercan’t

workbecausethey’re –incapacitated(gettingcertainbenefitsbecauseofadisabilityorillhealth) –aninpatientinhospital –inprisoneitheronremandorservingacustodialsentence –entitledtoCarer’sAllowance

Also see pages 13 to 15 about the disability elements.

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Ifyou’renotresponsibleforachildorqualifyingyoungpersonyoucanclaimWorkingTaxCreditifyouoryourpartner,ifyouhaveone,areaged:•25oroverandworkatleast30hoursaweek•16orover,workatleast16hoursaweekandqualifyforthedisability

elementofWorkingTaxCredit•over60andworkatleast16hoursaweek

Ifyou’repartofacouplewithchildren,you’reeligibleforthe30-hourelementifyoujointlyworkatleast30hoursaweek.Thisisprovidingoneofyouworksatleast16hours.Coupleswithoutchildrencan’taddtheirhourstogethertoqualifyforthe30-hourelement.

Youmustexpecttheworkto:•continueforatleast4weeksafteryou’vemadetheclaim•bepaid,soforexample,workingasavolunteerwhereyou’renotpaid

doesn’tnormallycount

YoucanstillclaimWorkingTaxCreditifyouworkataschoolorcollegeanddon’tworkduringschoolorcollegeholidays.

Formoreinformationonhowtoworkoutyourhours,gotowww.gov.uk/claim-tax-credits/working-hours

Forself-employedcustomers,gotowww.gov.uk/hmrc-internal-manuals/claimant-compliance-manualandsearchforCCM6755

Ifyou’reafostercarerthehoursyouworkasafostercarermaycountfortaxcreditsifyou’repaidbyyourlocalauthority.IffostercaringisyourmainsourceofincomeoryourmainjobyoumaygetWorkingTaxCredit.

LimitationstoentitlementEntitlementtoWorkingTaxCreditisdeliberatelywiderangingbutsomerestrictionsapply.WorkingTaxCreditmaynotbeavailabletoyou,ifyouare:•engagedbyacharitableorganisation,oravolunteer,andgetonlyexpenses

payments•workingforalocalauthority,healthauthority,charitableorvoluntary

organisationcaringforsomeonewhoisn’tamemberofyourhouseholdandwheretheonlypaymentyougetiscoveredbytheRent-a-Roomscheme

•engagedonaschemeforwhichatrainingallowanceisbeingpaidunlessthetrainingallowanceistaxableaspartofyouremployedorself-employedincome

•participatingintheIntensiveActivityPeriodorPreparationforEmploymentProgramme,unlessthepaymentsyougetaretaxableaspartofyouremployedorself-employedincome

•engagedinanactivitywhereasportsawardhasbeenmade•participatinginanEmploymentZoneprogrammeunlessyouonlyget

disregardeddiscretionarypaymentsoratrainingpremium•servingacustodialsentenceorremandedincustodyandareengagedin

workwhileservingthesentenceorremandedincustody•astudentonlydoingworkaspartofyourcourse,asanygrantorloan

thatyoureceiveisformaintenanceanddoesn’tcountaspaymentforwork•astudentnurse,astheNHSBursaryandothergrantsorloansyoureceive

don’tcountaspaymentforwork

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MaternityleaveMostwomengetStatutoryMaternityPay(SMP)orMaternityAllowance(MA)forthefirst:•26weeksofordinarymaternityleave•13weeksofanyadditionalmaternityleave

Thiscanbefollowedbyupto13weeksofunpaidleave.

Forthe26weeksofordinarymaternityleave,andforthefirst13weeksofadditionalmaternityleave,thatis,foratotalof39weeks,whetherornotyou’regettingSMPorMA,you’restilltreatedasbeinginworkandabletoclaimWorkingTaxCredit.Thisisprovidingyouandyourpartner,ifyouhaveone,workedtherequirednumberofhoursapplicabletoyourcircumstancesimmediatelybeforegoingonmaternityleave.Thisalsoappliesifyou’reself-employed.

Ifyou’reafirst-timemother,youcanclaimWorkingTaxCreditfromthedateofbirthofyourfirstchild.Thisisprovidingyouandyourpartner,ifyouhaveone,usuallyworkedtherequirednumberofhoursapplicabletoyourcircumstances,asapersonresponsibleforachild,immediatelybeforegoingonmaternityleave(readWorkinghoursonpage9).

Whenthe39weeks(thisincludes26weeksofordinarymaternityleaveand13weeksadditionalmaternityleave)areover,youcontinuetobeeligibleforWorkingTaxCreditifyoubeginworkagainatthatpoint.Anyfurtheradditionalmaternityleavedoesn’tcountasbeinginwork.Youmusttelluswithinonemonthifyoudon’tgobacktoworkafterthe39weeks.

AdoptionleaveorpaternityleaveIfyouadoptachildyoumaybeeligibleforStatutoryAdoptionPay(SAP)forthefirst:•26weeksofordinaryadoptionleave•13weeksofanyadditionaladoptionleave

Newparentsmaybeeligiblefor2weeksordinarypaternityleaveandbepaidOrdinaryStatutoryPaternityPay(OSPP)forthose2weeks.Newparentsmaybeeligibleforupto26weeksadditionalpaternityleaveandbepaidAdditionalStatutoryPaternityPay(ASPP)ifyourpartnerhasreturnedtowork.

Ifyou’reonordinaryadoptionleave,ordinaryoradditionalpaternityleave,oronthefirst13weeksofanyadditionaladoptionleave,whetherornotyou’regettingSAP,OSPPorASPP,you’llstillcountasbeinginworkandabletoclaimWorkingTaxCredit.Thisisprovidingyouandyourpartner,ifyouhaveone,workedtherequirednumberofhoursapplicabletoyourcircumstancesimmediatelybeforegoingonadoptionorpaternityleave.Thisalsoappliesifyou’reself-employed(readWorkinghoursonpage9).

Ifyou’reafirst-timeparent,youcanclaimWorkingTaxCreditfromthedateofplacementforadoptionorbirthofyourfirstchild.Thisisprovidingyouandyourpartner,ifyouhaveone,workedtherequirednumberofhoursapplicabletoyourcircumstancesasapersonresponsibleforachildimmediatelybeforeyouradoptionorpaternityleavebegan.

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Whenyourtimeon:•ordinaryadoptionleave•ordinaryoradditionalpaternityleave•thefirst13weeksofadditionaladoptionleaveisover,youcontinuetobeeligibleforWorkingTaxCreditifyoubeginworkingagainatthatpoint.Anyfurtherleavedoesn’tcountasbeinginwork.Youmusttelluswithinonemonthifyoudon’tgobacktoworkafterthistime.

SharedParentalLeaveYoumaybeentitledtoSharedParentalLeave(SPL)andStatutorySharedParentalPay(ShPP)if:•yourbabywasbornonorafter5April2015•youadoptedachildonorafter5April2015

YoucanstartSPLifyou’reeligibleandyouoryourpartnerendtheirmaternityoradoptionleaveorpayearly.TheremainingleavewillbeavailableasSPL.TheremainingpaymaybeavailableasShPP.

YoucantakeSPLinupto3separateblocks.Youcanalsosharetheleavewithyourpartnerifthey’realsoeligible.ParentscanchoosehowmuchoftheSPLeachofthemwilltake.

SPLandShPPmustbetakenbetweenthebaby’sbirthandfirstbirthday(orwithinoneyearofadoption).SPLandShPPareonlyavailableinEngland,ScotlandandWales.

Ifyou’reeligibleandyouoryourpartnerendmaternityoradoptionleaveandpay(orMaternityAllowance)early,thenyoucantaketherestofthe:•52weeksofleave(uptoamaximumof50weeks)

asSharedParentalLeave(SPL)•39weeksofpay(uptoamaximumof37weeks)asStatutoryShared

ParentalPay(ShPP)

Amothermusttakeaminimumof2weeksmaternityleavefollowingthebirth(4ifsheworksinafactory).

ForanyperiodyouoryourpartnerarereceivingStatutorySharedParentalPayyou’restilltreatedasbeinginworkandabletoclaimWorkingTaxCredit.Thisisprovidingyouandyourpartner,ifyouhaveone,workedtherequirednumberofhoursapplicabletoyourcircumstancesimmediatelybeforegoingonSharedParentalLeave(SPL).Thisalsoappliesifyou’reself-employed.

WhenyourtimeonSPLisover,youcontinuetobeeligibleforWorkingTaxCreditifyoubeginworkingagainatthatpoint.Anyfurtherleavedoesn’tcountasbeinginwork.Youmusttelluswithinonemonthifyoudon’tgobacktoworkafterthistime.

SickleaveIfyou’reoffworkforupto28weeksbecauseofillnessandaregettingeither:•StatutorySickPay(SSP)•short-termIncapacityBenefitatthelowerrate•EmploymentandSupportAllowance•IncomeSupportpaidonthegroundsofincapacityforwork•NationalInsurancecreditsonthegroundsofincapacityforworkor

limitedcapabilityforwork

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thenyou’llstillcountasbeinginworkandbeabletoclaimWorkingTaxCredit.Thisisprovidingyouandyourpartner,ifyouhaveone,workedtherequirednumberofhoursapplicabletoyourcircumstancesimmediatelybeforeyoustartedgettinganyofthesebenefits.Thisalsoappliesifyou’reself-employed(readWorkinghoursonpage9).

Whenthe28weeksofsickleaveareoveryoucontinuetobeeligibleforWorkingTaxCreditifyoubeginworkagainatthatpoint.Anyfurthersickleavedoesn’tcountasbeinginwork.Youmusttelluswithinonemonthifyoudon’tgobacktoworkafterthe28weeks.

ThedisabilityelementIfyoumeetallofthefollowing3conditions,youmaybeabletogetthedisabilityelementofWorkingTaxCredit.Ifyou’reclaimingasacoupleandyourpartneralsomeetsall3conditions,youmaybeabletoget2disabilityelements.

Condition1:Youusuallywork16hoursormoreaweek.

Condition2:Youhaveadisabilitywhichputsyouatadisadvantageingettingajob.

Detailsofthedisabilitieswhichcounttomeetthisconditionaresetoutinthenotesthatgowiththetaxcreditsclaimform.Theyrelatetoawiderangeofthings,forexample:•seeing•hearing•communicatingwithpeople•gettingaround•usingyourhands•reachingwithyourarms•mentaldisabilities•exhaustionandpain

Wemayaskyoutogiveusthenameofahealthcareprofessionalwhocanconfirmhowyourdisabilityaffectsyou.Forexample,adoctor,adistrictorcommunitynurse,oranoccupationaltherapist.

Condition3:Youcurrentlyget,orhavebeengetting,aqualifyingsicknessordisabilitybenefit.

You’llmeetthisconditionifatleastoneofthefollowing4descriptionsappliestoyou,orifyou:•wereentitledtothedisabilityelementofWorkingTaxCreditwithinthe

last8weeks•hadthisentitlementbecauseyousatisfiedoneofthedescriptionsin

2,3or4onthefollowingpages

1You’regettingoneofthefollowingqualifyingbenefits: •AttendanceAllowance •DisabilityLivingAllowance,PersonalIndependencePaymentorArmed

ForcesIndependencePayment •IndustrialInjuriesDisablementBenefit(withConstantAttendance

Allowanceforyou) •avehicleprovidedundertheInvalidVehicleScheme •WarPension(withConstantAttendanceAllowanceorMobility

Supplementforyou)

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2Youhavereceivedasicknessordisabilitybenefitforatleastonedayinthelast6months.Thebenefitsthatcountare:

•EmploymentandSupportAllowance(ESA),whereyouhavereceivedthisallowancefor28weeksormoreoryoureceivedStatutorySickPay(SSP)followedbyESAforacombinedperiodof28weeksormore(seeNote1below)

•IncapacityBenefitattheshort-termhigherrateorthelong-termrate •income-basedJobseeker’sAllowance* •IncomeSupport* •HousingBenefit* •SevereDisablementAllowance

* This must include a Disability Premium or a Higher Pensioner Premium for you.

Note1:The28weeksdoesn’tneedtobeasinglecontinuousperiod.Youcanaddtogetheranyperiodsthatyougot:•EmploymentandSupportAllowance(ESA),aslongastheywerenomore

than12weeksapart•StatutorySickPay(SSP),aslongastheywerenomorethan8weeksapart•SSPwithperiodsthatyougotESA,aslongastheywerenomorethan12

weeksapart

3Youhavebeen‘trainingforwork’foratleastonedayinthelast8weeks.

‘Trainingforwork’meansattendinggovernment-runtrainingsuchasthatprovidedbytheWorkProgrammeintheUK,WorkBasedLearningforAdultsinWales,TrainingforWorkinScotlandoracoursethatyouattendedfor16hoursormoreaweektolearnanoccupationalorvocationalskill.

Inthe8weeksbeforeyoustartedtrainingforworkyoumusthavebeengetting:•IncapacityBenefitpaidattheshort-termhigherrateorlong-termrate•SevereDisablementAllowance•contribution-basedESAfor28weeksormore•StatutorySickPay(SSP)followedbycontribution-basedESAfora

combinedperiodof28weeksormore(seeNote2)

Note2:The28weeksdoesn’tneedtobeasinglecontinuousperiod.Youcanaddtogetheranyperiodsthatyougot:•contribution-basedESA,aslongastheywerenomorethan12

weeksapart•anyperiodsthatyougotSSP,aslongastheywerenomorethan

8weeksapart•SSPwithperiodsthatyougotcontribution-basedESA,thisisproviding

theywerenomorethan12weeksapartandyoumetthecontributionconditionsforcontribution-basedESAonthedaysthatyougotSSP

4Allofthefollowing4points(4.1to4.4)applytoyou.

4.1You’vebeengettingatleastoneofthebenefitsinboxAorboxBfor20weeksormore(readNote3overleaf),andyougotthisbenefitwithinthelast8weeks.

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A• Statutory Sick Pay• Occupational Sick Pay• Incapacity Benefit at the short-term lower rate• Income Support paid because of incapacity for work• National Insurance credits awarded because of incapacity for work

B• Employment and Support Allowance• National Insurance credits awarded on the grounds of limited capability for work

Note3:The20weeksdoesn’tneedtobeasinglecontinuousperiod.Youcanaddtogetheranyseparateperiodsthatyougotthebenefitsorcreditsin: •boxA,aslongastheywerenolongerthan8weeksapart •boxB,aslongastheywerenolongerthan12weeksapart

4.2Yourdisabilityislikelytolastforatleast6monthsortherestofyourlife.

4.3Yourgrossearnings(beforetaxandNationalInsurancecontributionsaretakenoff)areatleast20%lessthantheywerebeforeyouhadthedisability.

4.4Yourgrossearnings(beforetaxandNationalInsurancecontributionsaretakenoff)areatleast£15aweeklessthantheywerebeforeyouhadthedisability.

Formoreinformation,gotoGOV.UKandsearchforTC956.

Ifyoudon’thaveinternetaccessyoucanalsogetacopybyphoningtheTaxCreditHelplineon03453003900.

TheseveredisabilityelementIfyouoryourpartner(ifyou’reclaimingasacouple)getDisabilityLivingAllowance(highestratecarecomponent),enhanceddailylivingcomponentofPersonalIndependencePayment,ArmedForcesIndependencePaymentorAttendanceAllowance(higherrate),youcangettheseveredisabilityelement.

Youdon’thavetobeworkingtoqualifyfortheseveredisabilityelementaslongasyourpartnerisworking.Ifyoubothqualify,you’llget2severedisabilityelements.

HelpwiththecostsofchildcareYoumaybeabletogetmoreWorkingTaxCredittohelpwiththecostofregisteredorapprovedchildcare.ThisisthechildcareelementofWorkingTaxCredit.Thechildcareelementcanhelpwithupto70%ofyourchildcarecosts,uptoamaximumcostof£175aweekforonechildand£300aweekfor2ormorechildren.Thismeansthatthechildcareelementisworthupto:•£122.50aweek(70%of£175)forfamilieswithonechild•£210.00aweek(70%of£300)forfamilieswith2ormorechildren

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TheamountyougetwilldependonyourincomeandwillbepaiddirectlytothemaincareralongwithChildTaxCredit.

Toclaimthechildcareelementyoumustbe16orover.

Ifyou’realoneparent,youmustwork16hoursaweekormore.

Ifyou’reinacouple,bothofyoumustwork16hoursaweekormore.Onlyonepartnerneedstowork16hoursaweekormoreiftheotheris:•incapacitated•aninpatientinhospital•inprisoneitheronremandorservingacustodialsentence•entitledtoCarer’sAllowance

You’llbetreatedasincapacitatedifyougetoneofthefollowing:•DisabilityLivingAllowance,PersonalIndependencePaymentor

ArmedForcesIndependencepayment•AttendanceAllowance•SevereDisablementAllowance•IncapacityBenefitattheshort-termhigherrateorlong-termrate•IndustrialInjuriesDisablementBenefit(withConstantAttendance

Allowanceforyou)•WarPension(withConstantAttendanceAllowanceormobility

supplementforyou)•HousingBenefitwithadisabilitypremiumorhigherpensionerpremium•CouncilTaxReduction(sometimescalledCouncilTaxSupport)witha

disabilitypremiumorhigherpensionerpremiumthathasbeeninpaymentsince1March2013andWorkingTaxCredithasbeenincontinuouspaymentsince1March2013

•avehicleundertheInvalidVehicleScheme•contribution-basedEmploymentandSupportAllowance(ESA)ifyougot –thisallowancefor28weeksormore –StatutorySickPay(SSP)followedbycontribution-basedESAfora

combinedperiodof28weeksormore

The28weeksdoesn’tneedtobeasinglecontinuousperiod.Youcanaddtogetheranyperiodsthatyougot:•contribution-basedESAaslongastheywerenomorethan12weeksapart•SSPaslongastheywerenomorethan8weeksapart•SSPwithperiodsthatyougotcontribution-basedESA,aslongas

theywerenomorethan12weeksapartandyoumetthecontributionconditionsforcontribution-basedESAonthedaysthatyougotSSP

YoucanclaimthechildcareelementforanychilduptotheSaturdayfollowing1Septemberaftertheir:•15thbirthday•16thbirthdayif –thechildiscertifiedasseverelysightimpairedorblindbya

consultantophthalmologist –thechildceasedtobecertifiedasseverelysightimpairedorblindbya

consultantophthalmologistinthe28weeksbeforethedateofyourclaim –yougetDisabilityLivingAllowanceorPersonalIndependencePayment

forthatchild

Ifyou’reonpaidmaternity,adoptionorpaternityleaveandarestilltreatedasbeinginwork,youcanclaimthecostsforregisteredorapprovedchildcareyoupayfor:•thechildyou’vetakenleavetolookafter•anyotherchildrenyou’reresponsiblefor

Thiswillenableyoutosettleanewbabyorchildintochildcarebeforereturningtowork.

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YoucanclaimWorkingTaxCredit,includingthechildcareelementfromthebirthoradoptionofthechild,aslongasyou(andyourpartner,ifyouhaveone)usuallyworkedatleast16or24hoursaweek,dependingonyourcircumstances,beforethematernity,adoptionorpaternityleavebegan(read‘Workinghours’onpage9).

Readpage29aboutchangestoyourchildcare.Youmusttellusaboutthesechangesastheymayaffecthowmuchtaxcreditswepayyou.

WhatwemeanbyregisteredorapprovedchildcareIn England

TogethelpwithchildcarecostsinEngland,thechildcareyouusemustbeprovidedby:•achildcareprovider,suchasachildminder,playscheme,childcareclubor

nurseryandtheyneedtoberegisteredononeofthefollowing –OfstedEarlyYearsRegister(EYR)witheitherOfsted

oranOfstedregisteredchildminderagencyifyourchildisunder5yearsofage

–OfstedcompulsorypartofGeneralChildcareRegister(GCR)witheitherOfstedoranOfstedregisteredchildminderagencyifyourchildisaged5to7

–OfstedvoluntarypartoftheGCRwitheitherOfstedoranOfstedregisteredchildminderagencyifyourchildisaged8orover

•anannywhoprovidescareinthechild’sownhome–aslongasthey’reregisteredwithOfsted

•anactivity-basedcare,suchasasportsclub–aslongastheproviderisregisteredwithOfsted

•aschool,toachildaged2,3or4yearsold,aslongasbothofthefollowingapply

–it’sprovidedunderthedirectionoftheschool’sproprietor(eitherthegoverningbodyorthepersonresponsibleformanagingtheschool)

–ittakesplaceontheschoolpremisesorotherpremisesthatmaybeinspectedaspartofaninspectionofaschoolbyOfstedorbytheequivalentinspectionbodyappointedbytheSecretaryofStatetoinspectcertainindependentschools(forexample,theIndependentSchoolsInspectorate,BridgeSchoolsInspectorateortheSchoolsInspectionService)

•aschool,toachildagedbetween5and15yearsold(or16ifdisabled),ifallofthefollowingapply–it’sprovidedoutofschoolhours–it’sprovidedunderthedirectionoftheschool’sproprietor(eitherthe

governingbodyorthepersonresponsibleformanagingtheschool) –thecareisprovidedontheschoolpremisesoronotherpremisesthat

maybeinspectedaspartofaninspectionofaschoolbyOfsted,orbytheequivalentinspectionbodyappointedbytheSecretaryofStatetoinspectcertainindependentschools–anexampleof‘otherpremises’couldbeavillagehallusedbytheschoolforitschildcareactivitiesoutsideofschoolhours

•anapprovedfostercarerregisteredwithOfsted–butthechildcaremustbeforachildwhoisn’tthecarer’sfosterchild

•acareworkeroranursefromaregistereddomiciliarycareagency,lookingafteryourchildinyourownhome

FormoreinformationaboutchildcareinEngland,gotowww.gov.uk/childcare-tax-credits

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In Scotland

TogethelpwithchildcarecostsinScotland,yourchildcareprovidermustbe:•registeredwithSocialCareandSocialWorkImprovementScotland•achildcareclubregisteredwithSocialCareandSocialWorkImprovement

Scotlandtoprovidechildcareoutsideofschoolhours•apersonfromaregisteredchildcareagency,sitterserviceornannyagency

providingchildcareinyourchild’shome

YoucanalsoclaimhelpwithyourchildcarecostsinScotlandifyouuse:•anapprovedfostercarer•akinshipcarerbutthechildcaremustbeforachildwhoisn’tthecarer’sfosterorkinshipchild.ThefostercarerorkinshipcarermustberegisteredwithSocialCareandSocialWorkImprovementScotlandasachildminderoradaycareprovider.

FormoreinformationaboutchildcareinScotland,gotowww.scottishfamilies.gov.uk

In Wales

TogethelpwithchildcarecostsinWales,yourchildcareprovidermustbe:•registeredbytheNationalAssemblyforWalesthroughtheCareandSocial

ServicesInspectorateforWales(CSSIW)•apersonwhoisemployedorengagedunderacontractforservicesto

providecareandsupportbytheproviderofdomiciliarycaresupportservicewithinthemeaningofPart1oftheRegulationandInspectionofSocialCare(Wales)Act2016

•aschoolthatprovideschildcareoutsideofschoolhoursandontheschoolpremises

•alocalauthoritythatprovideschildcareoutsideofschoolhours•someoneapprovedbytheApprovalofChildcareProviders(Wales)

Scheme2007whoprovideschildcareinthechild’shome,orifseveralchildrenarebeinglookedafter,inoneofthechildren’shomes

•anapprovedfostercarerbutthechildcaremustbeforachildwhoisn’tthecarer’sfosterchildandthefostercarermustbe

–registeredwiththeCareandSocialServicesInspectorateWalesifyourchildisunderage8

–approvedundertheApprovalofChildCareProviders(Wales)Schemeifthecareisinyourchild’shomeandyourchildisunderage16

FormoreinformationaboutchildcareinWales,gotowww.wales.gov.ukandsearchforchildcare

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In Northern Ireland

TogethelpwithchildcarecostsinNorthernIreland,yourchildcareprovidermustbe:•registeredwithaHealthandSocialCareTrust•aschoolthatprovideschildcareoutsideofschoolhours,onthe

schoolpremises•apersonapprovedundertheApprovalofHomeChildCareProviders

(NorthernIreland)2006Schemeprovidingchildcareinthechild’shome•anEducationandLibraryBoardthatprovideschildcareoutsideof

schoolhours•anapprovedfostercarer,butthechildcaremustbeforachildwhoisn’t

thecarer’sfosterchild,andthefostercarermustbe –registeredwithaHealthandSocialCareTrustifyourchildis

underage12 –approvedundertheApprovalofHomeChildCareProviders(Northern

Ireland)2006Schemeifthecareisinyourchild’shomeandyourchildisunderage16

FormoreinformationaboutchildcareinNorthernIrelandcontacttheEarlyYearsTeaminyourlocalHealthandSocialCareTrust.

Gotowww.nidirect.gov.uk/early-years-teams

CrownservantsworkingabroadIfyou’reacivilservantoramemberofthearmedforcespostedoverseas,andyourchildhasgonewithyou,youmaygethelpwithchildcarecostsifyourchildcareproviderisapprovedbyaMinistryofDefenceaccreditationschemeabroad.

ChildcareprovidedbyarelativeYoucan’tgetthechildcareelementofWorkingTaxCreditifyourchildcareisprovidedbyarelativeevenifthey’reregisteredorapproved.

Theexceptiontothisiswhenyourchildiscaredforbyarelativewho’sa:•registeredchildminderwhocaresforyourchild,awayfromyourchild’s

ownhome•childcareproviderapprovedunderaHomeChildCareProvidersScheme

inWalesorNorthernIreland,whocaresforyourchildawayfromyourchild’sownhome.Theymustalsocareforatleastoneotherchildwho’snotrelatedtothem

Therelationshipcanbebyblood,half-blood,marriage,civilpartnershiporaffinity.‘Affinity’meansapersonwithastrongrelationshiptothechild,forexample,someoneinaparentalpositionregardingtheirpartner’schildren,andthiscouldincludestep-parents.

Youcan’tclaimthecostsofchildcareifitisn’tregisteredorapproved.Yourprovidershouldbeabletotellyouwhetherornotthey’reregisteredorapproved.Someprovidershavetorenewtheirregistrationeachyear.Asktoseetheirregistrationorapprovalcertificatetocheckthatit’sstillvalid.

A relative could be your child’s:• parent • grandparent• aunt or uncle• brother or sister • step-parent

A person who has entered into a civil partnership is recognised as being able to provide childcare as a parent, grandparent, aunt or uncle, or step-parent.

If you have any questions about the meaning of ‘relative’, phone the Tax Credit Helpline on 0345 300 3900.

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Inordertoclaimthechildcareelementyoumustworkoutyouraverageweeklychildcarecosts.Formoreinformationabouthowtodothis,readourleafletWTC5,‘WorkingTaxCredit:helpwiththecostsofchildcare’.

GotoGOV.UKandsearchforWTC5.

Ifyoudon’thaveinternetaccess,phonetheTaxCreditHelplineon03453003900foracopy.

HowmuchWorkingTaxCredityoucangetWorkingTaxCreditispaidinadditiontoanyChildTaxCredityoumaybeentitledto.SomepeoplewillbepaidbothChildTaxCreditandWorkingTaxCredit.

TheamountofyourWorkingTaxCreditawardisbasedonyourcircumstances(forexample,howmanyhoursyouworkorwhetheryou’redisabled)andyourincome.Thetablebelowprovidesaguidetohowmuch(inpounds)youcouldgetforthetaxyear6April2018to5April2019.

Thetablebelowshowshowmuchmoneyyoucouldgetifyouareinworkandnotresponsibleforanychildrenoryoungpersons.

Annualincome(£)

Singlepersonaged25orover,working30hoursormoreaweek

Couple(workingadultsaged25orover)working30hoursormoreaweek

12,215 1 395 2,405

13,000 75 2,085

14,000 0 1,675

15,000 0 1,265

16,000 0 855

17,000 0 445

18,000 0 35

19,000+ 0 0

1Someone aged 25 or over, working 30 hours a week on National Living Wage

(based on April 2018 rates) would earn £12,215 a year.

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Thetablebelowshowshowmuchmoneyyoucouldgetforthetaxyear6April2018to5April2019ifyou’reinworkandresponsibleforatleastonechildoryoungperson.

Annualincome

(£)

Onechild/qualifyingyoung

person

2children/qualifyingyoung

persons

3children/qualifyingyoung

persons

6,2401 7,300 10,080 12,865

12,2152 5,735 8,515 11,295

15,000 4,595 7,375 10,155

20,000 2,545 5,325 8,105

25,000 495 3,275 6,055

30,000 0 1,225 4,005

35,000 0 0 1,955

40,000+ 0 0 0

1Those with incomes of £6,240 a year are assumed to work part-time (working between 16 and 29 hours a week).

2In families with an income of £12,215 a year or more, at least one adult is assumed to be working 30 or more hours a week (consistent with National Living Wage of £7.83 based on April 2018 rates for those aged 25 and over).

Note: If you have a child with a disability you may be entitled to more.

Using these tables, for example, if you are claiming as a lone parent or a couple with 2 children and working 30 hours or more a week, with an income of £12,215 a year, you could get an annual tax credits award of £8,515.

The maximum amounts may be higher if you’re entitled to the disability or childcare elements of Working Tax Credit.

4 Incomeandcapital

Theamountoftaxcreditsyou’llgetdependsonyourcircumstances,forexample:•howmanychildrenorqualifyingyoungpersonsyou’reresponsiblefor•howmanyhoursyouworkeachweek•whetheryou’redisabled•howmuchyoupayforregisteredorapprovedchildcare

Italsodependsonthelevelofyourincome.Ifyou’repartofacouple,itdependsonyourjointincome.

AsChildTaxCreditandWorkingTaxCreditareannualtaxcredits,we’lllookatyourincomeforataxyeartoworkoutyouraward,usuallythelastcompletetaxyearbeforetheyearofthetaxcreditsclaim.

WhatincomeyouhavetoreportFortaxcredits,wegenerallytakeintoaccountyourgrossearningsfigure(thisisbeforeIncomeTaxandNationalInsurancedeductions).Thereareexceptions,someofwhichareoutlinedonthenextpage.

For more information about what types of income count for tax credits purposes, phone the Tax Credit Helpline on 0345 300 3900.

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IfyoumakecontributionsfromyourearningstobuysharesinyouremployerscompanyunderShareIncentivePlan,thenthosecontributionsmustbeaddedbacktoyourgrosspay.

ContributionstoanyHMRevenueandCustomsregisteredpensionscheme(suchasapersonalpensionplanorretirementannuity)andpaymentsundertheGiftAidschemeshouldbedeductedwhenyouworkoutyourincomeforataxcreditsclaim.Ifyoumadepersonalpensionorretirementannuitycontributions,GiftAidpaymentsoratradingloss,readTC825,‘WorkingsheetfortaxcreditsreliefforGiftAiddonations,pensioncontributionsandtradinglosses’.

GotoGOV.UKandsearchforTC825.

Ifyoudon’thaveinternetaccessphonetheTaxCreditHelplineon03453003900foracopy.Thiswillhelpyoutoworkouttheincometoenteronyourtaxcreditsclaim.

Youshouldn’tnormallydeductanycontributionstoanoccupationalpensionschemeorpaymentsunderapayrollgivingorGiveAsYouEarnscheme.Thisisbecauseyouremployerwillhavealreadydeductedthesepaymentsfromyourgrosspay.

Wetakethefullamountofsalaryandwagesintoaccountwhenweworkouthowmuchtaxcreditstopay,thisincludes:•commission•bonuses•tips•gratuities•profit-relatedpay•holidaypay•statutorySickPay(SSP)•somebenefitsinkindwhichmaybeprovidedbyyouremployer

(forexample,carandcarfuel,allowancesfortheuseofyourowncaronbusiness,vouchersandcredittokens)

AlthoughStatutoryMaternityPay(SMP),StatutoryPaternityPay(SPP)andStatutoryAdoptionPay(SAP)aretaxable,youshoulddeducttheactualamountpaiduptoamaximumof£100foreachweekofpaymentfromyourincomefortaxcreditspurposes.YoushouldincludeanyearningsfromemploymentoutsidetheUK,forexample:•taxableprofitsfromself-employment,includinganyfromoutsidetheUK•thefollowingtaxablesocialsecuritybenefits –Carer’sAllowance –BereavementAllowance –contribution-basedJobseeker’sAllowance –contribution-basedEmploymentandSupportAllowance –IncomeSupportpaidtoacoupleandthepersongettingitwasonstrike –IncapacityBenefitpaidafterthefirst28weeksofincapacity(atthe

short-termhigherandlong-termrates,includinganychilddependencyincreasespaidwiththesebenefits)

Butnot,non-taxablebenefitssuchas –ChildBenefit –AttendanceAllowance –DisabilityLivingAllowanceorPersonalIndependencePayment –CouncilTaxReduction(sometimescalledCouncilTaxSupport)or

HousingBenefit –income-relatedEmploymentandSupportAllowance

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•income-basedJobseeker’sAllowanceistaxablebutisn’tincludedasincomefortaxcredits

•anAdultDependants’Grantpaidtostudentswithaspouse,unmarriedpartneroradependentadultandinScotland,anyChildsDependant’sGrant

•miscellaneousincomethat’staxablesuchascopyrightroyaltiespaidtosomeonewhoisn’taprofessionalauthororcomposer,whichistaxableunderPart5oftheIncomeTax(TradingandOtherIncome)Act2005

Wealsotakeintoaccount:•StateRetirementPensions(includingWidowedParent’sAllowance,

WidowedMother’sAllowance,Widow’sPensionandIndustrialDeathBenefit)andoccupationalorpersonalpensions–butnotwarpensions,whetherpaidongroundsofwoundsordisabilityorpaidtowidows

•mostincomefromsavingsandinvestments(forinstance,interestfrombankandbuildingsocietyaccounts,dividendsfromUKcompanies,paymentsfromtrustsortheestateofadeceasedpersoninadministration)–butnotincomefromcertaintaxexemptinvestments,suchas,

IndividualSavingsAccounts(ISAs),PersonalEquityPlans(PEPs)ornon-taxableNationalSavingsproducts

•rentalincomefromproperty–butnotincomewhichisexemptfromIncomeTaxundertheRentaRoomscheme(briefly,ifyouletfurnishedaccommodationinyourownhomeforupto£7,500ayear)

•foreignincome,forexample,frominvestmentsorpropertyoverseasandsocialsecuritypaymentsfromoverseasgovernments,beforeanyoverseastaxwastakenoffbutdeductinganybankchargesorcommissionwhenconvertingforeigncurrencytopounds–wewanttoknowaboutallforeignincome,whetherornotitwasreceivedandtaxedintheUK,unlessyouwereunabletosendtheincometotheUKbecauseofexchangecontrolsinthecountryoforigin

Butyoushoulddeductthefirst£300fromthecombinedtotalapartfrom:•incomefromemployment•selfemployment•taxablesocialsecuritybenefits•studentdependant’sgrant•miscellaneousincomeYouonlyneedtoreportotherincomeifit’smorethan£300ayearintotal.Ifitis,youonlyneedtoentertheamountover£300onthetaxcreditsclaimform.Ifyoumakeaclaimasacouple,the£300limitappliestoyourjointincome,nottoeachofyouseparately.

Forhelponhowtoworkoutyourincomeifyou’reemployedorself-employed,gotowww.gov.uk/tax-credits-working-out-income

AboutcapitalWe’llnotnormallytakecapital(thatis,depositsincurrentandsavingsaccountsatbanksandbuildingsocieties,mostlumpsumpaymentsandthevalueofproperty,sharesandotherinvestments)intoaccountwhenweworkoutyourentitlementtotaxcredits.

However,insomecaseswheretheIncomeTaxrulestreatcapitalasincome,andtaxitassuch,you’llbeexpectedtoincludethetaxableamountasincomeinyourtaxcreditsclaim.Thiscanhappenif,forexample,youholdsharesinaUKcompanyandthecompanygivesyouastockdividend(newshares)insteadofacashdividend.Thisispartofwhatwecall‘notionalincome’.

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What‘notionalincome’meansBesidescapitalthat’streatedasincomeundertheIncomeTaxrules,notionalincomealsoincludesincomethatyoucanbetreatedashavingwhichyoumaynotinfacthave,suchas:•trustincomepayabletoonepersonbutwhichtheIncomeTaxrulestreat

astheincomeofanotherperson–thetaxcreditsrulesalsotreattheincomeasbelongingtothatotherperson(forexample,investmentincomeofachildwheretrustfundshavebeenprovidedbyaparentandtheamountexceeds£100)

•incomeyoumayhavedeprivedyourselfofforthepurposeofgettingtaxcreditsormoretaxcredits

•incomethatwouldbeavailabletoyouifyouappliedforit,forexample,asocialsecuritybenefit.Therearesomeexceptions,forexample,–adeferredstateorpersonalpensionorretirementannuity–compensationforpersonalinjury

•ifyouworkorprovideaserviceforfreeorlessthanthegoingrate,you’retreatedasgettingthegoingrateforthejobifthepersonyou’reworkingforortowhomyou’reprovidingtheservicehasthemeanstopay–thisdoesn’tapplyifyou’reworkingasavolunteer(forexample,helpingoutinacharityshoporaCitizensAdviceBureau)oryou’reonanemploymentortrainingprogramme

TaxcreditsandmaintenancepaymentsWedon’ttakemaintenancepayments,suchaschildsupportorpaymentsunderadivorcesettlementintoaccountwhencalculatingyourtaxcreditsaward.You’llbeabletohavefulluseofanymaintenancethatyougetinadditiontoyourtaxcredits.

ChildTaxCreditandstudentloansorgrantsWedon’ttakestudentloansorgrantstomeetthecostoftuitionfees,childcareortheParent’sLearningAllowanceintoaccountwhencalculatingyourtaxcreditsaward.ButyoushouldtellusifyougetanAdultDependant’sGrantforaspouse,unmarriedpartneroradependantadultandinScotland,anyChildsDependant’sGrant.

Ifyou’reastudentnurseorahealthprofessiontraineeandyougetabursaryundertheNHSBursaryScheme,youdon’tneedtotellusaboutthesepaymentsinyourclaim.

Whenyou’vefinishedyourstudiesandstartwork,repaymentsofstudentloansaren’tdeductiblefromincomeintaxcreditsclaims.

WhereyoucanfinddetailsofyourincomeIfyouwereemployedinthetaxyear2017to2018,detailsofyourearningswillbeshownonyour:•P60taxcertificategiventoyoubyyouremployeraftertheendofthattax

year,oraP45ifyouleftbefore5April2018•payslips•P11Dcertificate(ifyougotrelevantbenefitsinkind)giventoyoubyyour

employer

Ifyouwereself-employedinthetaxyear2017to2018,detailsofyourearningswillbeshownonyourSelfAssessmenttaxreturn.

For more information, or if you haven’t sent us a tax return, see the notes that come with the claim form.

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Ifyourtaxcreditsawardisrenewedautomaticallyandyou’reinPAYEemployment,we’llhaveusedincomefiguresprovidedtousbyyouremployer.It’simportantthatyoucheckthesefiguresarecorrectfortaxcredits.Contactusifyouthinkthey’renot.Yourrenewalnoteswillhelp.

BenefitsinkindfromyouremployerYouremployerwillgiveyouthedetailsyouneedonaformP11D.Thenoteswiththetaxcreditsclaimformwilltellyouexactlywhichbenefitstotellusabout.Ifyouremployerhas‘payrolled’thesebenefitsyou’llneedtodeductthetotalcashequivalentfromthetotalofyourP60andP45income.

Ifyou’reself-employed,youshouldtellusthetaxableprofitcalculatedinyourSelfAssessmenttaxreturnfor2017to2018.However,ifyou’reafarmer,marketgardeneroracreatorofliteraryorartisticworks,averagingreliefforfluctuatingprofitsisn’tallowedintaxcreditsclaims;furtherdetailsareprovidedinthenotes(page15)thatgowiththetaxcreditsclaimform(TC600).Ifyouhaven’tyetsentusyourSelfAssessmenttaxreturnfor2017to2018,youmustestimateyourprofitsforthatyear.

Ifyourbusinessmadealossinthattaxyear,fortaxcreditspurposesyoucanoffsetthatlossagainst:•otherincomeyoumayhaveforthatyear•anyincomeofyourspouseorcivilpartnerforthatyear•anyincomeofyourpersonalpartner(butnotyourbusinesspartner)for

thatyear

Ifthisdoesn’tuseuptheentireloss,thebalance(thatis,theunusedpartofthelossafterdeductingtheamountssetagainstotherincomeofthatyear)mustbecarriedforwardtooffsetagainsttheprofitsofthesamebusinessinafuturetaxyear.Forexample,ifyourbusinessmadealossin2016to2017andthereissomelossremainingafterthedeductionfromotherincomeof2016to2017,theunusedpartofthe2016to2017lossmustbebroughtforwardanddeductedfromtheprofitsofthesamebusinessinthetaxyear2017to2018.

Ifyoumadeatradingloss,readTC825,‘WorkingsheetfortaxcreditsreliefforGiftAiddonations,pensioncontributionsandtradinglosses’.

GotoGOV.UKandsearchforTC825.

Ifyoudon’thaveinternetaccess,phonetheTaxCreditHelplineon03453003900foracopy.

Ifyougottaxablesocialsecuritybenefitsin2017to2018,theDepartmentforWorkandPensions(inNorthernIreland,theDepartmentforCommunities)shouldhavesentyouarecordofthetaxableamountofbenefit.

Ifyougotothertypesofincome,youshouldrefertothestatements,passbooksortotaxdeductioncertificatesprovidedbythepayeroftheincomeandwhichyoushouldbekeepingfortaxpurposes.

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5 Howyourawardisworkedout

Theamountoftaxcreditsthatyouandyourpartner,ifyouhaveone,willgetisworkedoutbydividingeachoftheelementsofChildTaxCreditandWorkingTaxCreditwhichyourfamilyisentitledtobythenumberofdaysinthetaxyearandroundinguptothenearestpennytogiveadailyrate.Thesedailyratesarethenmultipliedbythenumberofdaysintherelevantperiodandaddedtogethertogiveyourfamily’smaximumentitlement.

Wethenlookatyourincome,andyourpartner’sifyouhaveone,toworkoutwhetheryou’llgettaxcreditsinfulloratareducedrate.We’llsendyouanawardnoticewhichtellsyouhowmuchtaxcreditsyou’llgetandwhenpaymentswillstart.

Ifyouoryourpartner,ifyouhaveone,getIncomeSupport,income-basedJobseeker’sAllowance,income-relatedEmploymentandSupportAllowanceorPensionCredityou’llautomaticallygetthefullamountoftaxcreditsthatyouqualifyfor.

Ifyou’reentitledtoChildTaxCreditonly,you’llgetthefullamountuntilyourannualincomereaches£16,105.

Ifyou’reentitledtoWorkingTaxCredit,whetheronitsownorinadditiontoChildTaxCredit,andyourfamily’sannualincomeisbelowthethresholdof£6,420,you’llgetthemaximumamountofalltheelementsthatyouqualifyfor.Ifyourincomeisover£6,420,themaximumamountisreducedby41penceforeverypoundofincome(41%)overthe£6,420(roundeddowntothenearestpenny).

Ifyourincomeisover£6,420,yourtaxcreditswillbereducedinthefollowingorder:•WorkingTaxCreditapartfromthechildcareelement•thechildcareelementofWorkingTaxCredit•thechildelementsofChildTaxCredit•thefamilyelementofChildTaxCredit

Whathappensonceyou’regettingtaxcreditsYourtaxcreditsawardwillinitiallybebasedonyourcurrentcircumstancesandyourincomefortheprevioustaxyear.

Ifyourcircumstancesdon’tchangeandtherearenosignificantchangesinyourincomeduringtheyear,theinitialawardwillrununtiltheendofthetaxyear(5April).

Attheendofthetaxyear,we’llsendyouarenewalnoticethattellsyoutheinformationweholdaboutyourclaim,inparticularthecircumstancesandincomewebasedtheawardandtheamountoftaxcreditspaidtoyouovertheyear.Youshouldcheckthisnoticecarefullyand:•confirmthatthedetailsarecorrect,ifwe’veaskedyouto•correctthedetailsiftherearechangesthatyouhaven’tpreviously

toldusabout

Youalsoneedtotellusaboutyourincomefortheyearjustended.Youcandothisby:

goingonlineatwww.gov.uk/managetaxcredits• phoningtheTaxCreditHelplineon03453003900• completingthenoticeandreturningitintheenvelopeprovided

You can see some examples of how we calculate tax credits awards on pages 36 to 45.

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Oncewe’veallthedetails,we’ll:•checkwhethertheamountwepaidyouwasright•workoutyourawardforthefollowingyear,astherenewalnoticewill

alsoactasyourclaimforthefollowingyear

Ifyourcircumstancesandincomestayedthesamethroughouttheyearthathasjustended,orifyourincomeinthatyearwasn’tmorethan£2,500higherthantheyearbeforethat,youshouldhavegottherightamountoftaxcreditsforthatyear.

Ifyourincomegoesdownby£2,500orlessthroughouttheyear,theamountsoftaxcreditsyougetwon’tbeaffected.

Asyourcurrentyearpaymentsareprovisionalandbasedonyourpreviousyearsincome,youshouldletusknowofanychangestoyourincomeastheyhappen.Waitinguntilyoumakeyourrenewaldeclarationattheendoftheyearwillleadtoanoverpaymentinsomecaseswhichyoumaybeaskedtorepay.

IfyouonlygetthefamilyelementofChildTaxCredit,orhavebeengettingthefullamountofChildTaxCredityouqualifyforbecauseyou’vebeengettingIncomeSupport,income-basedJobseeker’sAllowance,income-relatedEmploymentandSupportAllowanceorPensionCreditforthewholeoftheperiodofyouraward,youdon’thavetodoanythingifyourincomeremainswithintherangespecifiedintheend-of-yearnotice,providedyourcircumstanceshaven’tchanged.Thisnoticewilltellyouwhetheryouneedtoreturnitornot.

Ifyoudon’thavetoreturnthenotice,you’llbetreatedashavingautomaticallymadeanewclaimforthenextaward.

WhathappensifyourcircumstancesorincomechangeTherearesomechangesthatcouldaffecttheamountofyourtaxcreditsaward.Theyinclude:•changestothenumberofadultsinthehousehold,forexample,ifyouand

yourpartnerstoplivingtogetherorifyou’vebeenlivingonyourownandyoubeginlivingwithsomeoneasacouple

•changesaffectingtheelementsoftaxcreditsyou’reeligibleto,suchas–thebirthordeathofachild–achildorqualifyingyoungpersonleavingthehouseholdorstopping full-timenon-advancededucationorapprovedtraining–stoppingusingregisteredorapprovedchildcare–changingyourusualweeklyworkinghours–movingabroad

•youoryourpartnerbegintoqualifyforadisabilityelementofWorkingTaxCredit

•youoryourpartnernolongerhaveadisabilitywhichputsyouatadisadvantageingettingajob

•achildyou’reresponsibleforiscertifiedasseverelysightimpairedorblindbyaconsultantophthalmologist

•DisabilityLivingAllowanceorPersonalIndependencePaymentstartsorstopsbeingpaidforachildyou’reresponsiblefor

•thehighestratecarecomponentofDisabilityLivingAllowanceortheenhanceddailylivingcomponentofPersonalIndependencePaymentstartsorstopsbeingpaidforyou,yourpartner,orachildyou’reresponsiblefor

You can tell us about any of these changes by:

going online at www.gov.uk/ managetaxcredits

Or if you don’t have internet access by:

phoning theTax Credit Helpline on 0345 300 3900

writing to us atHM Revenue and Customs Tax Credit Office (Change of circumstances) BX9 1ER United Kingdom

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•thehigherrateofAttendanceAllowancestartsorstopsbeingpaidforyouoryourpartner

•changesinincomebetweenthepreviousyearandthecurrentyear

Youshouldkeep:•arecordofanychangesincircumstancesyou’vetoldusabout•yournewawardnoticeafteryou’vetoldusaboutachange

ofcircumstances

ChangesincircumstancesYouneedtotellusaboutanychangesinyourcircumstances.Ifyoudon’t,youmaybeoverpaidtaxcreditsoryoumaynotgetthefullamountyou’reentitledto.Youmayalsohavetopayapenaltyofupto£300.

Ifachangeincreasestheamountoftaxcreditsyoureceive,itcanonlybebackdatedbyuptoonemonth.Forexample,ifyouhadababyon12Junebutyoudidn’treportthisuntil12October,yourtaxcreditswouldonlyincreasefrom12September.

Thechildelementforayoungpersonaged16,18or19willautomaticallystopeachyearunlessyoutellusthatthey’restayinginfull-timenon-advancededucationorapprovedtraining.

Thechildelementforayoungpersonaged17stayinginfull-timenon-advancededucationorapprovedtrainingwillautomaticallycontinue.

Youmusttelluswithinonemonthifyoumadea:•singleclaimbutyou’renowmarried,inacivilpartnership,orlivingwith

someoneasifyou’remarriedorinacivilpartnership•jointclaim(aspartofacouple)butarenowseparated,oroneofyoudies

Ifanyofthesechangeshappenyou’llneedtomakeanewclaim.

Youmustalsotelluswithinonemonthifyou:• oryourpartnerstopworking• oryourpartnerstopworkingmorethantherelevantminimumof16

or30hoursaweek(forcoupleswithchildren24hoursaweekisthecombinedminimumandoneofyoumustworkatleast16hoursaweek)

•arelaidoff• havebeenonstrikeformorethan10days• oryourpartnerleavetheUKpermanentlyorgoabroadformorethan

8weeks(12weeksifyougoorremainabroadbecauseyou’reillorbecauseamemberofyourfamilyisillorhasdied)

• andyourpartnerlosetherighttoresideintheUKFormoreinformation,gotowww.gov.uk/tax-credits-if-moving-country-or-travelling

Youmustalsotelluswithinonemonthif:• achildorqualifyingyoungpersonleavesthefamilyandmovestolive

withsomeoneelse–thisincludesachildorqualifyingyoungpersonwhohasbeen–takenintocareorfosteredtoanotherfamily–sentencedtocustodyordetentionforaperiodofmorethan4months

• achildorqualifyingyoungpersondies• aqualifyingyoungpersonleavesfull-timenon-advancededucationor

approvedtrainingbeforeage20yearsorstopsbeingregisteredwithacareersservice,Connexions,localauthoritysupportservice,MinistryofDefenceorsimilarorganisation

• aqualifyingyoungpersonstartstohavetheirtrainingprovidedunderacontractofemployment

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• aqualifyingyoungpersonstartstogetIncomeSupport,income-basedJobseeker’sAllowance,EmploymentandSupportAllowance,ChildTaxCredit,WorkingTaxCreditorUniversalCreditintheirownright

• youtoldusthatyourchildwascontinuinginfull-timenon-advancededucationorapprovedtrainingafter31Augustfollowingtheir16thbirthday,butdidn’tthendoso

Ifyouclaimedchildcarecostsyoumusttellusif:• youraverageweeklycostsgodownby£10ormore• yourcostsgodowntozero• yourchildcareproviderstopsbeingregisteredorapproved• youstartgettinghelpwithyourchildcarefromalocalauthorityorany

governmentdepartment–suchasearlyyearseducationgrantfor3to4yearolds

• youstartgettinghelpwithyourchildcarecoststhroughyouremployer,suchaschildcarevouchersorchildcarevouchersinreturnforareductioninyoursalary(knownassalarysacrifice)

• younolongerqualifyforchildcarecostsasacouplebecauseoneofyouisnowworkinglessthan16hoursaweek

Youshouldtellusifyouchangetoadifferentregisteredorapprovedchildcareprovider.We’llneedtoknowyournewprovider’sregistrationorapprovalnumber.Theamountoftaxcreditsyougetwon’tusuallybeaffectedifallyourothercircumstancesstaythesame.Wemayneedtocontactyourchildcareproviderfromtimetotimetomakechecks.Ifweareunabletocontactyourprovider,wemaystoppayingyoutheextraWorkingTaxCreditforyourchildcare.

ChangestoyourworkinghoursYoumusttelluswithinonemonthif:•youstopworking16or30hoursaweek(forcoupleswithchildren,

24hoursaweekbetweenyou,withatleastoneofyouworking16hoursaweek)

•youworkatleast30hoursaweekandyourhoursdroptolessthan30(forcoupleswithchildren,yourjointworkinghourscounttowardsthe30hours)

•youstopwork•youremployerlaysyouoff

YoumaygetWorkingTaxCreditfor4weeksfromthechangeif:•yourworkinghoursdroptolessthan16or30hoursaweek(forcouples

withchildren24hoursbetweenyouandoneofyoumustworkatleast16hoursaweek)

•youstopworkcompletely

Ifyouremployerlaysyouoffandtellsyouit’stemporary,you’retreatedasthoughyou’restillworkingforupto4weeksfromthedateyouremployerlaysyouoff.Ifthere’snoworkforyouafterthat,you’retreatedasnotworking.You’llbeentitledtoa‘runon’paymentofWorkingTaxCreditforafurther4weeksbeforeyourWorkingTaxCreditstops.

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YoucanonlygetWorkingTaxCreditforupto8weeksafteryouremployerlaysyouoff.

Example1John Smith is laid off for 4 weeks on 8 January. His employer tells him that he can expect to go back to work on 5 February. John phones the Tax Credit Helpline to tell them about this. He also tells them when he expects to go back to work.

On 5 February he goes into work. His employer has no work for John and doesn’t know if he will in the future. John phones the Tax Credit Helpline to tell them the layoff is now indefinite. He’ll continue to get Working Tax Credit up to 5 March.

If your employer lays you off but can’t tell you if you’ll go back to work or you’ll lose your job

Ifduringthefirst4weeksyou’relaidoffyouremployersaysyou:•arenowlaidoffindefinitely•havelostyourjobyou’llbetreatedasifyou’vestoppedworkfromthedaytheytoldyou.You’llstillgetWorkingTaxCreditfor4moreweeksfromthatdate.

Example2Anne Jones is laid off on 8 January. Her employer tells her she can expect to go back to work on 1 February. Anne phones the Tax Credit Helpline and tells them the layoff is temporary. On 26 January her employer tells her that they don’t know if she’ll be able to go back to work at all. Anne phones the Tax Credit Helpline to tell them the layoff is now indefinite. Anne is treated as though she has stopped work. She’ll get Working Tax Credit up to 23 February (4 weeks from 26 January).

Example3On 8 January Anita Roberts is told that her employer has to lay her off indefinitely. Her employer doesn’t know if she’ll be able to go back to work at all. Anita phones the Tax Credit Helpline to tell them she’s been laid off indefinitely. Anita will get Working Tax Credit up to 5 February.

Youneedtotellusstraightawayaboutanychangesthatmayincreaseyourtaxcreditsawardsuchas:•anewchildinthefamily•startingtouseregisteredorapprovedchildcare•youraverageweeklychildcarecostsincreaseby£10aweekormore•anincreaseinyourworkinghours(orthoseofyourpartner)soyoumeet

theworkinghoursconditionsforWorkingTaxCredit,readpage9

Togetanyincreasebackdatedfromthedateyourcircumstanceschange,youmusttelluswithinonemonth.

ChangesinincomeYourawardwillinitiallybebasedonyourincomefortheprevioustaxyear.

Ifyourincomethroughoutthecurrenttaxyearrisesbylessthan£2,500,itwon’taffectyourawardandwe’llstillbaseitonyourincomeforthepreviousyear.Soforthecurrentyear,you’llgetthebenefitofariseinincomeupto£2,500withoutitreducingyourtaxcreditsaward.Theincreasedlevelofyourincomeisn’ttakenintoaccountuntilthenextyear,butyoushouldtellusabouttheincreaseonorbefore6Apriltoavoidanoverpaymentofyourprovisionalpayments.

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Ifyourincomegoesdownby£2,500orlessthroughouttheyear,theamountoftaxcreditsyougetwon’tbeaffected.

Ifyourincomeinthecurrentyearislowerthanlastyear’sincomebymorethan£2,500,we’lldisregardthefirst£2,500.Forexample,ifyourincomelastyearwas£20,000andthisyearyouexpectittobe£15,000we’llcalculateyourtaxcreditsawardonanincomeof£17,500.Inthiscase,youmaybeduemoretaxcredits.Youcan:•tellusaboutthisdropduringtheyear–we’llthenadjustyourpaymentsto

makesureyougettherightamountin-year•waituntilwefinaliseyourawardandwe’llpayyouanyextrataxcredits

you’redueinalumpsum

We’llcheckattheendoftheyearwhatyourincomewas.Ifyoutellusduringtheyearaboutafallinyourincomeandit’slessthanyouexpected,you’llhavetopaybackanytaxcreditsyou’vebeenoverpaid.

Ifyourincomeincreasesbymorethan£2,500,thenwe’llcalculateyourfinalawardonyourcurrentyear’sincomeafterdisregardingthefirst£2,500oftheincrease.Wewill,however,usethefullamountofincomewhencalculatingyourawardforthefollowingyear.

WhathappensiftherearechangesinyourtaxcreditsawardYoushouldtellusimmediatelyifyouthinkthatyourincomewillincreasebymorethan£2,500inthecurrenttaxyear.Thiswillhelpyoutoavoidbuildingupanoverpaymentoftaxcreditswhichyou’llhavetopaybackafterwefinaliseyourawardattheendoftheyear.

Ifyourtaxcreditsawardgoesupbecauseofachangeincircumstanceswhichincreasesyourentitlement,andifyou’vetoldusaboutthisduringtheyear,we’ll:•payanyextrataxcreditsforuptoonemonthbeforetheadjustmentwas

madeinalumpsum•increaseyourawardfortherestoftheyear

Ifyourincomehasreducedbymorethan£2,500andyoutellusaboutitduringtheyear,we’llpayyouanyextrataxcreditsduefromthedateyoutellusaboutit.If,attheendofthetaxyear,wefindthatyouwereduemoretaxcreditsthanyouwereinfactpaidbecauseofachangeincircumstancesorincome,we’llpaytheextraamountasalumpsum.Youshouldtellusimmediatelyifyouthinkthatyourincomewillgodowninthecurrenttaxyear.Yourawardmaynotgoupthisyear,butyoumaygetmorenextyear.

Ifyourtaxcreditsawardgoesdownbecauseofachangeincircumstanceswhichreducesyourentitlement,oranincreaseofmorethan£2,500inyourincomethatyou’vetoldusaboutduringtheyear,we’llreduceyourtaxcreditsawardforthewholeperiodsothatwepayyoutherightamountfortheyearoverall.

Alternatively,ifwe’vepaidyoutoomuchinthistaxyear(orapreviousone)we’llautomaticallyreduceyourongoingpaymentsuntilyoupaybacktheoverpaidmoney.

Theamountwereduceyourpaymentsbydependsontheamountoftaxcreditsyoureceive.Wemakeourdecisionbasedontheinformationyougaveusaboutyourincome.Thehigheryourincome,themoreyourtaxcreditspaymentsarereduced.

Checkyourawardnoticetofindoutifyougettaxcreditsatareducedrate.

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Ifyoudo,it’sshownas‘reductionduetoyourincome’inpart2ofyourawardnotice–‘Howweworkoutyourtaxcredits’.

Forthoseentitledtothemaximumtaxcreditswithnoreductionduetoincome,themostwe’lltakebackis10%ofyourongoingpayments.

Ifyou’regettingChildTaxCreditorWorkingTaxCreditbelowthemaximumandyourtotalhouseholdincomeis£20,000orless,themostwe’lltakebackis25%ofyourongoingpayments.

Ifyourtotalhouseholdincomeexceeds£20,000,themostwe’lltakebackis50%ofyourongoingpayments.

Ifyou’reonlygettingthefamilyelementofChildTaxCredit,we’lltakebackupto100%ofyourongoingpayments.

IfyoudisagreewiththelevelofyourtaxcreditsawardorwithhavingtopayapenaltyIfyouthinkthatsomethingonyournoticeiswrongormissingthencontactusstraightawayandwe’lltrytoputitright.

Ifwecan’tresolveyourtaxcreditsorpenaltyproblemandyou’renotsatisfied,youcanaskustolookatthedecisionagain.Wecallthis‘mandatoryreconsideration’.Normallyyouhavetodothiswithin30daysofthedateofyourawardnotice.

Tofindoutmore,seeourleafletWTC/AP,‘WhattodoifyouthinkyourChildTaxCreditorWorkingTaxCreditiswrong’.

GotoGOV.UKandsearchforWTC/AP.

Ifyoudon’thaveinternetaccess,phonetheTaxCreditHelplineon03453003900foracopy.

Whenwe’velookedatthedecisionagainwe’llsendyouaMandatoryReconsiderationNoticetotellyouwhatwe’vedone.Ifyou’restillunhappywiththedecision,theMandatoryReconsiderationNoticewillincludealltheinformationyouneedtomakeanappealtoHMCourtsandTribunalsService(HMCTS)inEngland,ScotlandandWalesorTheAppealsServiceinNorthernIreland.

6 Helpandadvice

HowtoclaimorgetmoreinformationabouttaxcreditsYoucanmakeaclaimbyfillinginandreturningtheclaimformTC600.

TogetaclaimformorformoreadviceaboutChildTaxCreditorWorkingTaxCredityoucan:• online,gotowww.gov.uk/claim-tax-credits• phonetheTaxCreditHelplineon03453003900• textphonetheTaxCreditHelplineon03453003909

Forouropeninghours,gotowww.gov.uk/contact-hmrc

BackdatingyourclaimWecannormallyonlybackdateyourtaxcreditsforupto31daysfromthedatewegetyourclaim.So,toavoidlosingmoneymakesureyouclaimstraightaway.

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You’llneedtoaskforbackdatingifanyofthefollowingapply.You’re:

• receivingIncomeSupport,income-basedJobseeker’sAllowance,income-relatedEmploymentandSupportAllowance,orPensionCredit

• onlyclaimingWorkingTaxCreditandhaven’treceivedIncomeSupport,income-basedJobseeker’sAllowance,income-relatedEmploymentandSupportAllowance,orPensionCreditinthelast31days

• claimingbothWorkingTaxCreditandChildTaxCredit,andhavecomeoffIncomeSupport,income-basedJobseeker’sAllowance,income-relatedEmploymentandSupportAllowance,orPensionCreditinthelast31days

Toaskforbackdating,sendusaseparatesheetofpaperwithyourclaimformtellingus:

• yourname,addressandNationalInsurancenumber

• thedateyoustartedworkorthedateyoustartedgettingoneofthebenefitslistedabove

Taxcreditsclaimscansometimesbebackdatedmorethan31daysifyouapplywithinonemonthofbeinggrantedasylumorofthedecisionawardingyoucertainqualifyingsicknessordisabilitybenefits,forexample,DisabilityLivingAllowanceorPersonalIndependencePayment.Tellusthedateyourbenefitwasawardedfrom,ifthisappliestoyou.

Note:Wecan’tbackdateyourclaimintoaperiodwhereyoureceivedUniversalCredit.

Formoreinformationonbackdatingyourclaim,gotowww.gov.uk/claim-tax-credits/backdate-a-claim

LeavingthetaxcreditssystemThereare3reasonsyourtaxcreditsmaystop.

YoucanphonetheTaxCreditHelplineon03453003900orwritetoustotellusthatyoudon’twanttoclaim.

Ifyoudothisbefore31July,yourclaimforthecurrentyearwon’tberenewed.

Youmayhavealreadygotprovisionalpaymentsforthecurrentyearwhichwe’llaskyoutopayback.

Ifyoucontactusafter31July,yourclaimwillcontinueuntiltheendofthetaxyearbutwillnotberenewedforthenexttaxyear.

Youmaygetaletterfromustellingyouthatwe’llnotrenewyourclaimforthenextyearbecausethelevelofyourincomemeansthatyoudon’tcurrentlygetorwon’tgettaxcreditspaymentsforthenextyear.

Ifyouwanttorenewyourclaim,youshouldcontactusbythedateshownintheletter.

Eventhoughyoumaynotgetanypayments,youcanstillrenewandcontinueyourclaim–ifyoudo,thiswillprotectyourclaimifyourincomelaterreducesandyouthenbecomeeligibleyou’llnotneedtomakeanewclaim,orifyoucurrentlyqualifyforthedisabilityelementofWorkingTaxCredityoumaycontinuetoqualify.

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YouclaimUniversalCredit(youcan’tclaimtaxcreditsandUniversalCreditatthesametime).

Whetheryou’veaskedustostopyourclaimorwe’vewrittentoyoutotellyouthatwe’llnotrenewyourclaim,we’llstillsendyouanendofyearnotice.Youshouldstillprovideuswithanyinformationrequestedonthenoticesothatwecanfinaliseyourclaimfortheyearjustended.Ifyourclaimisnotrenewedforthenexttaxyearandyourcircumstanceschange,you’llneedtomakeanewclaim.Ifyoudomakeanewclaim:•we’llonlyusuallybackdateyournewclaimupto31days•youmaynotqualifyforthedisabilityelementofWorkingTaxCredit

(ifclaimedpreviously)

Insomecaseswemayhavepaidyoutoomuchtaxcredits,thisiscalledanoverpayment.Thismayhappenifyoutellusthatyounolongerwanttoclaimtaxcreditsforthenewtaxyear.HowwedealwithtaxcreditsoverpaymentsissetoutinourCodeofPractice26.

GotoGOV.UKandsearchforCOP26.

WhatotherhelpyoucangetIfyourincomeisbelowacertainlevelyoumaybeentitledtobenefitsandservices,suchashelpwiththecostsofhealthservices,providedbyothergovernmentdepartments,agenciesorlocalauthorities.Youmayneedtouseyourtaxcreditsawardnoticeasproofofyourincomeforthesebenefitsandservices.

Forinformationaboutthesebenefitsandservices,you’llneedtocontacttheorganisationthatprovidesthem.

IfyougetHousingBenefit,CouncilTaxReduction(sometimescalledCouncilTaxSupport),yourtaxcreditsawardmayaffecttheamountofbenefitsyou’reentitledto.Whenyougetyourawardorrenewalnotice,youshouldcontactyourlocalauthority’sHousingBenefit,CouncilTaxReduction(sometimescalledCouncilTaxSupport)officesothattheycanreassessyourcase.

ChildBenefitIfyou’reclaimingChildTaxCreditbecauseyou’reresponsibleforachildorqualifyingyoungperson,youmayalsobeentitledtoChildBenefit.Ifyou’venotalreadydoneso,youshouldmakeaclaimforChildBenefit.

AboutChildBenefitChildBenefitcanbeclaimedbyanyonebringingupachildorqualifyingyoungperson.It’spaidforeachchildoryoungpersonthatqualifies.

Youdon’tneedtobetheparentofthechildoryoungpersontoqualify,butyoumustberesponsibleforthem.

Thechildoryoungpersondoesn’tneedtolivewithyou,butiftheylivewithsomeoneelseyoucanonlygetChildBenefitif:•youpaymoneytobringupthechild•theamountyoupayisthesameas,ormorethan,theweeklyrateof

ChildBenefityougetforthem•thepersonthechildliveswithisnotgettingChildBenefitforthem

Additionalqualifyingconditionsapplyonceachildreachesage16.

Write to us at:Child Benefit Office PO Box 1 NEWCASTLE UPON TYNE NE88 1AA

For more information on other help that might be available, go to www.gov.uk/browse/benefits/families

For help with health costs, go to www.nhsbsa.nhs.uk and select ‘Help with Health Costs’.

For more information about Child Benefit, go to www.gov.uk/ child-benefit

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WhenandhowtoclaimChildBenefitChildBenefitcanonlybebackdatedforupto3monthsfromthedateyourclaimisreceivedintheChildBenefitOffice.Toavoidlosingmoneymakeyourclaimstraightaway.

YoushouldclaimChildBenefitassoonas:•yourchildisborn•achildoryoungpersonthatyou’reresponsibleforcomestolive

withyou•youadoptachildwhoislivingwithyou•youstarttocontributetothecostoflookingafterachildthatyou’re

responsiblefor,unlessthepersonthechildliveswithisalreadygettingChildBenefitforthemandtheamountyoucontributeisthesameas,ormorethan,theweeklyamountofChildBenefittheygetforthatchild

Ifyouhaveababy,thebountypackyoumaygetfromthehospitalwhenyourbabyisbornhasaChildBenefitclaimpackinside.Alternatively,orifanotherchildcomestolivewithyou,fillinaclaimformonline.

Gotowww.gov.uk/child-benefit

Youcanalso:• phonetheChildBenefitHelplineon03002003100orifyourpreferred

languageisWelsh,phone03002001900• textphonetheChildBenefitHelplineon03002003103

NationalInsurancecreditsforsocialsecuritybenefitsForadviceonNationalInsurance,includingNationalInsurancecreditsandSmallEarningsException,gotowww.gov.uk/personal-tax

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7 Examplesoftaxcreditscalculations

Thefollowingexamplesexplainhowtaxcreditswillhelppeopleindifferingcircumstances.Otherthanexample11,foreasyreference,thesecalculationsdon’ttakeaccountoftheroundingproceduresandtheweeklyamountsarecalculatedassuminga52-weekyear.

Example1–singleparent,workinglessthan30hoursaweek,withonechild.Patricia Taylor is a single parent with one child aged 12 and works less than 30 hours a week. Patricia’s gross earnings last tax year were £8,000 (rising to £8,400 in the current year) and apart from Child Benefit (which is disregarded for tax credits purposes) she has no other income. She doesn’t use registered or approved childcare.

Patricia’s maximum tax credits entitlement will be a combination of: • Child Tax Credit – family element (£545) and child element (£2,780), giving £3,325

a year • Working Tax Credit – basic element (£1,960) and lone parent’s element (£2,010),

giving £3,970 a year

A total of £7,295.

As her income in the current year is expected to rise by less than £2,500, her tax credits award for the year will be based on last year’s income. The income threshold is £6,420. Patricia’s award is worked out as follows:

Annual income £8,000.00

Less threshold –£6,420.00

Excess income £1,580.00

Maximum tax credits £7,295.00

Less 41% of excess income – £647.80

Award £6,647.20(£127.83aweek)

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Example2–singleparent,workingmorethan30hoursaweek,withonechildandusesaregisteredchildminder.Rebecca Dobson is a single parent with one child aged 4 and works more than 30 hours a week. She uses a registered childminder, which costs her £100 a week. Her gross earnings last tax year were £15,000 (rising to £15,750 in the current year). She gets Child Benefit and maintenance from the child’s father of £1,200 each year. She also has £5,000 in her building society account which in the previous tax year paid gross interest (that is, before tax) of £150 and she expects the same amount this current year. Her total gross income last tax year was therefore £16,350 (not including Child Benefit, which is disregarded). For the purposes of tax credits we also disregard the: • maintenance payments • gross interest, because it is below the £300 limit for reporting in the

tax credits claim form

Therefore, her income for tax credits purposes is only her earnings of £15,000 last year and £15,750 this year.

Rebecca’s maximum tax credits entitlement will be a combination of: • Child Tax Credit – family element (£545) and a child element (£2,780), giving £3,325 • Working Tax Credit – basic element (£1,960), a lone parent element (£2,010),

a 30-hour element (£810) and 70% of the eligible childcare costs of £100 a week (£5,200 a year), which is £3,640 a year, giving £8,420

A total of £11,745.

As her income in the current year is expected to rise by less than £2,500, her tax credits award for the year will be based on last year’s income. The income threshold is £6,420. Rebecca’s award is worked out as follows:

Annual income £15,000.00

Less threshold –£6,420.00

Excess income £8,580.00

Maximum tax credits £11,745.00

Less 41% of excess income –£3,517.80

Award £8,227.20(£158.22aweek)

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Example3–couple,workinglessthan30hoursaweek,withonechild.Jenny and Mike Smith have one child aged 5. Mike works 16 hours a week while Jenny works 8 hours a week. Mike had gross earnings last tax year of £15,000. Jenny’s gross earnings were £5,000 and apart from Child Benefit (which is disregarded for tax credits purposes) they have no other income. They don’t use registered or approved childcare.

Mike and Jenny’s maximum tax credits entitlement will be a combination of:• Child Tax Credit – family element (£545) and a child element (£2,780), giving £3,325 • Working Tax Credit – basic element (£1,960) and couple element (£2,010) giving £3,970

A total of £7,295.

As Mike and Jenny’s income in the current year is expected to rise by less than £2,500, their tax credits award for the year will be based on last year’s income. The income threshold is £6,420. Mike and Jenny’s award is worked out as follows:

Annual income £20,000.00

Less threshold –£6,420.00

Excess income £13,580.00

Maximum tax credits £7,295.00

Less 41% of excess income £5,567.80

Award £1,727.20(£33.22aweek)

However, if Mike’s hours dropped to below 16 hours a week, Mike and Jenny wouldn’t be entitled to Working Tax Credit because as a couple with children they have to work 24 hours a week between them with at least one of them working 16 hours a week.

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Example4–couple,bothworkmorethan30hoursaweek,with3childrenallofschoolageRashid and Yasmin Ali both work more than 30 hours a week and have 3 children, all of school age. They don’t use registered or approved childcare. Last tax year, Rashid earned £15,000 (rising to £15,750 in the current year) and Yasmin earned £11,700 (rising to £12,000 in the current year). She also got Child Benefit for the children. The couple also have £12,000 in a joint building society account, which last tax year paid gross interest of £360 and they expect the same amount this current year.

Their total gross income last tax year was therefore £26,760 (not including Child Benefit).

Their maximum tax credits entitlement will be a combination of: • Child Tax Credit – family element (£545) and a child element (£2,780 per child),

giving £8,885 • Working Tax Credit – basic element (£1,960), couple element (£2,010) and a 30-hour

element (£810), giving £4,780

A total of £13,665.

As Rashid and Yasmin’s income in the current year is expected to rise by less than £2,500, their tax credits award for the year will be based on last year’s income, with £300 of the gross interest being disregarded. This gives last year’s income of £26,760. The income threshold is £6,420. Their award is worked out as follows:

Annual income £26,760.00

Less threshold –£6,420.00

Excess income £20,340.00

Maximum tax credits £13,665.00

Less 41% of excess income –£8,339.40

Award £5,325.60(£102.42aweek)

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Example5–couple,onewhoworksmorethan30hoursaweek,withadisabledchild.Mike and Claire Jones have one child, aged 10, who is disabled. Mike works more than 30 hours a week while Claire stays at home to look after their child. Mike had gross earnings last tax year of £20,000 (rising to £21,000 in the current year). Claire gets Child Benefit and Personal Independence Payment (PIP) on behalf of the child, both of which are disregarded for tax credits purposes. The couple also have £12,000 in their joint building society account, which last tax year paid gross interest of £360 and they expect the same amount this current year. Their total gross income last tax year was therefore £20,360 (not including Child Benefit and or PIP).

Their maximum tax credits entitlement will be a combination of: • Child Tax Credit – family element (£545), a child element (£2,780) and a disabled child

element (£3,275), giving £6,600 • Working Tax Credit – basic element (£1,960), couple element (£2,010) and a 30-hour

element (£810), giving £4,780

A total of £11,380.

As Mike and Claire’s income in the current year is expected to rise by less than £2,500, their tax credits award for the year will be based on last year’s income, with £300 of the gross interest being disregarded. This gives last year’s income of £20,060. The income threshold is £6,420. Their award is worked out as follows:

Annual income £20,060.00

Less threshold –£6,420.00

Excess income £13,640.00

Maximum tax credits £11,380.00

Less 41% of excess income –£5,592.40

Award £5,787.60(£111.30aweek)

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Example6–singleperson,workingmorethan30hoursaweekNick Sinclair is single, aged 25, works more than 30 hours a week and has no children. His gross earnings last tax year were £12,700 (rising to £13,000 in the current year) and he’s no other income.

Nick’s maximum tax credits entitlement will be a combination of Working Tax Credit – basic element (£1,960) and a 30-hour element (£810), giving £2,770.

As his income in the current year is expected to rise by less than £2,500, his tax credits award for the year will be based on last year’s income. The income threshold is £6,420. Nick’s award is worked out as follows:

Annual income £12,700.00

Less threshold –£6,420.00

Excess income £6,280.00

Maximum tax credits £2,770.00

Less 41% of excess income –£2,574.80

Award £195.20(£3.75aweek)

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Example7–couple,onewhoworksmorethan30hoursaweek,withonechildVicky and Simon Graham have one child aged 12. Vicky works more than 30 hours a week and Simon is unemployed. They don’t use registered or approved childcare. Last tax year their gross earnings were £12,000. They’ve no other income (apart from Child Benefit, which is disregarded).

Their maximum tax credits entitlement will be a combination of:• Child Tax Credit – family element (£545) and a child element (£2,780), giving £3,325 • Working Tax Credit – basic element (£1,960), couple element (£2,010) and

a 30-hour element (£810), giving £4,780

A total of £8,105.

The income threshold is £6,420. Based on last year’s income, Vicky and Simon’s tax credits award would be as follows:

Annual income £12,000.00

Less threshold –£6,420.00

Excess income £5,580.00

Maximum tax credits £8,105.00

Less 41% of excess income –£2,287.80

Award £5,817.20(£111.87aweek)

However, at the start of the new tax year, Vicky takes a better paid job and expects to earn £13,500 gross a year. Simon also gets a job and expects to earn £21,000. This joint rise in income of £22,500 (£1,500 plus £21,000) is £20,000 higher than the £2,500 limit for reporting increases in income. They contact us immediately to have their tax credits award reassessed on the basis of their current year’s income.

Their maximum tax credits entitlement based on their circumstances remains the same but the increase in income will reduce their tax credits award. The first £2,500 of the increase in earnings is disregarded, so the revised award will be based on income of £32,000 (that is, £34,500 less £2,500). We’ll therefore amend Vicky and Simon’s award as follows:

Annual income £32,000.00

Less threshold –£6,420.00

Excess income £25,580.00

Maximum tax credits £8,105.00

Less 41% of excess income –£10,487.80

Award £0

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Example8–singleperson,worksmorethan30hoursaweek,withadisabilityMark Joyce is single, aged 30, works more than 30 hours a week and has no children. He’s deaf and gets Personal Independence Payment (PIP). Mark’s gross earnings last tax year were £12,700 (rising to £13,000 in the current year) and, apart from PIP (which is disregarded for tax credits purposes), he’s no other income.

His maximum tax credits entitlement will be a combination of Working Tax Credit - basic element (£1,960), a 30-hour element (£810) and disability element (£3,090), giving £5,860.

As his income in the current year is expected to rise by less than £2,500, his tax credits award for the year will be based on last year’s income. The income threshold is £6,420. Mark’s award is worked out as follows:

Annual income £12,700.00

Less threshold –£6,420.00

Excess income £6,280.00

Maximum tax credits £5,860.00

Less 41% of excess income –£2,574.80

Award £3,285.20(£63.18aweek)

Example9–couple,onewhostartsworkingmorethan30hoursaweekJohn Smith, aged 51, starts work at the beginning of the new tax year, having spent the previous year on contribution-based Jobseeker’s Allowance (JSA). His new job means that he works more than 30 hours a week and he expects to earn £29,000 gross a year. He and his wife Margaret, have £5,000 in their joint building society account, which currently pays £150 a year gross interest (this is disregarded as it’s below the £300 limit for reporting on the tax credits claim form). Margaret stays at home and the couple have no children or qualifying young persons living with them.

John and Margaret’s maximum tax credits entitlement will be a combination of Working Tax Credit – basic element (£1,960), couple element (£2,010) and a 30-hour element (£810), giving £4,780.

Their tax credits award will initially be based on their previous years income and then revised when they tell us their current year’s income. The first £2,500 of the increased income is disregarded. So the award will be based on income of £26,500 (that’s £29,000 less £2,500). The income threshold is £6,420. John and Margaret’s award is worked out as follows:

Annual income £26,500.00

Less threshold –£6,420.00

Excess income £20,080.00

Maximum tax credits £4,780.00

Less 41% of excess income –£8,232.80

Award £0

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Example10–couple,bothworkingwithachildbornafter6April2017Reece and Scarlett Jones both work more than 30 hours a week and each get a salary of £12,000 a year and have 2 children of school age. On 8 October 2017, their third child is born who is disabled. Scarlett gets Child Benefit, and Personal Independence Payment (PIP) on behalf of the disabled child, both of which are disregarded for tax credits purposes. They use a registered childminder for the child born on 8 October 2017, which costs £100 a week

Their maximum tax credits entitlement will be a combination of: • Child Tax Credit:

– family element (£545) – payable as they have 2 children born before 6 April 2017, and the child element totalling £5,560 (£2,780 for each child born before 6 April 2017), a disabled child element (3,275) payable for the relevant period (in this example of 180 days) of £1,615 for the child born on 8 October 2017

Giving a Child Tax Credit entitlement of £7,720.• Working Tax Credit – basic element (£1,960), the couple element (£2,010) and the

30-hour element (£810), 70% of the eligible Childcare costs which is £3,640 a year payable for the relevant period (in this example of 180 days) of £1,795.07

Giving a Working Tax Credit entitlement of £6,575.07.

Annual income £24,000.00

Less threshold –£6,420.00

Excess income £17,580.00

Maximum tax credits £14,295.07

Less 41% of excess income –£7,207.80

Award £7,087.27

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Thefollowingexampletakesaccountoftheroundingprocess.

Example11–couple,whobothworkandtheirfirstchildisbornafter6April2017.Colin and Mary Owen are in their early twenties. They both work more than 30 hours a week and each get a salary of £12,000 a year. On 8 October 2018, their first child is born and Mary gives up work permanently to look after the child. Colin continues to work at the same level of salary. Mary gets Child Benefit but this is disregarded for tax credits purposes. Their tax credits entitlement for the tax year 2018 to 2019 will be based on Colin’s salary of £12,000 and Mary’s salary for the first 6 months of the tax year of £6,000, giving a total gross income of £18,000.

Colin and Mary can’t claim tax credits for the first 6 months of 2018 to 2019 because they’re both under 25, neither have a disability and at that stage, have no children. For the next 6 months, 8 October 2018 to 5 April 2019, they can claim both Child Tax Credit and Working Tax Credit – as they’re now responsible for a child.

Their maximum tax credits entitlement will be a combination of: • Child Tax Credit – they’re not entitled to the family element (£545) as the child was born

after 6 April 2017, child element (£2,780) which is divided by the number of days in the tax year (365 days in 2018 to 2019) and rounded up to the nearest penny to give a daily rate – these daily rates are then multiplied by the number of days in the relevant period (in this example 180 days) and added together, giving a Child Tax Credit total of £1,371.60

• Working Tax Credit – basic element (£1,960), couple element (£2,010), 30-hour element (£810) which are divided by the number of days in the tax year and rounded up to the nearest penny to give a daily rate – these daily rates are then multiplied by the number of days in the relevant period and added together, giving a Working Tax Credit total of £2,358.00

Total tax credits of £3,729.60.

As the fall in their income was over £2,500, their tax credits award will be based on the current year’s income (£18,000) plus £2,500 (disregard) giving an income of £20,500. This figure is then divided by 365 (the number of days in the tax year) and multiplied by 180 (the number of days in the relevant period). This gives an income of £10,109.59. The income threshold is £6,420 divided by 365 and multiplied by 180 giving £3,166.03. Colin and Mary’s award is worked out as follows:

Annual income £10,109.59

Less threshold –£3,166.03

Excess income £6,943.56

Maximum tax credits £3,729.60

Less 41% of excess income –£2,846.86

Award £882.74(£16.98aweekfrom8October2018 to5April2019)

8 UniversalCreditandtaxcreditsUniversalCreditsupportspeoplewhoareonalowincomeoroutofworkandisgraduallyreplacingarangeofexistingbenefits,includingWorkingTaxCreditandChildTaxCredit.EligibilitytoclaimUniversalCreditdependsonwhereyouliveandyourpersonalcircumstances.Youcan’treceiveUniversalCreditandtaxcreditspaymentsatthesametime.

IfyouclaimUniversalCredityourtaxcreditsawardwillend.Ifyou’realreadygettingtaxcredits,youdon’tneedtodoanythingyet.Youshouldcontinuetoreportchangesinyourcircumstancesthatcouldaffectyourtaxcreditsstraightaway.IfyourchangeofcircumstancesmeansyouclaimUniversalCredit,forexample,ifyouloseyourjoborstartlivingwithapartnerwhoalreadygetsUniversalCredit,yourtaxcreditspaymentswillstop.

FormoreinformationaboutUniversalCredit,gotowww.gov.uk/universal-credit

9 Yourrightsandobligations‘YourCharter’explainswhatyoucanexpectfromusandwhatweexpectfromyou.

Formoreinformation,gotowww.gov.uk/hmrc/your-charter

If you give us incorrect information, we may charge you a penalty up to £3,000 or we may prosecute you.

Our leaflet WTC7, ‘Tax credit penalties’ gives more information about penalties. For a copy:

go to GOV.UKand search for WTC7

• phone the Tax Credit Helpline on 0345 300 3900if you don’t have internet access

These notes are for guidance only and reflect the position at the time of writing. They don’t affect any right of appeal.

HMRC Digital Services April 2018 © Crown copyright 2018

HMRC 04/18

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