Child tax credit

Child tax credit

CTC is a payment made to people who have children. It can be paid whether you are working or not working. You get a higher amount if you have a child with a disability. The amount of CTC depends on your income in the tax year.

Who can get child tax credit

If you are not in the UC system, you qualify for CTC if:1ss3(3) and (7), 8 and 42 TCA 2002; regs 3-5 CTC Regs; reg 3 TC(R) Regs; reg 3 TC(Imm) Regs

•you are aged 16 or over; and
•you are responsible for a child or ‘qualifying young person’ (see here); and
•you are ‘present and ordinarily resident’ in the UK, not a ‘person subject to immigration control’ and have a ‘right to reside’. These terms are explained in CPAG’s Welfare Benefits and Tax Credits Handbook; and
•your income is not too high (see here).

 

Who counts as a child

A child counts for CTC purposes up to her/his 16th birthday.2Reg 2 CTC Regs

 

Who counts as a qualifying young person

A ‘qualifying young person’ is someone who:3Regs 2, 4 and 5(2)-(4) CTC Regs

•is aged 16, until 31 August after her/his 16th birthday; or
•is aged 16 or 17; and
◦has left education or training; and
◦has, within three months of leaving education or training, notified HMRC that s/he has registered for work, education or training with Skills Development Scotland; and
◦is within 20 weeks of the date s/he left education or training; or
•is aged over 16 but under 20 and on a full-time course of non-advanced education (see here) or on an approved training course (see here). A 19 year old is only included if s/he started, enrolled or was accepted onto the course or training before her/his 19th birthday.

 

Responsible for a child

You are treated as responsible for a child if:4Reg 3(1) rr1 and 2 CTC Regs

•s/he normally lives with you; or
•you have the main responsibility for her/him (this second test only applies where you and someone else make competing claims for CTC for the same child).

Only one person (or one couple in a joint claim) can get tax credits for a particular child.5Reg 3(1) r2.2 CTC Regs You should get tax credits if the child ’normally lives with you’.6Reg 3(1) rr1 and 2 CTC Regs HMRC says this means that the child ’regularly, usually, typically’ lives with you.7para 02202 TCTM

If a child normally lives in more than one household (eg, s/he shares her/his time between two different households), there may be more than one potential claimant for tax credits. You can decide between you who should make the claim. If you cannot agree, HMRC decides whose claim should take priority by establishing who has ‘main responsibility’ for the child.8Reg 3(1) r3.1 CTC Regs HMRC is likely to take account of:9para 02204 TCTM

•whether there is a court order setting out where the child is to live, or who is to care for her/him. However, the terms of a court order should not outweigh the facts of the case;10GJ v HMRC (TC) [2013] UKUT 561 (AAC)
•how many days a week the child lives in the different households;
•who pays for the child’s food and clothes;
•where the child’s belongings are kept;
•who is the main contact for nursery, school or childcare provider;
•who does the child’s laundry;
•who looks after the child when s/he is ill and takes her/him to the doctor.

If you disagree with HMRC’s decision (eg, it decides that you cannot get CTC because another person has the main responsibility for a child), you can ask for a mandatory reconsideration and then appeal against it (see Chapter 2).

There are special rules about when CTC can be paid if a child is absent from home. Whether CTC continues to be paid depends on the circumstances. See the relevant chapter of this Handbook for information on what happens to CTC when a child is away from home. There are also special rules which mean that some people cannot get CTC for a child even though s/he is living with them. See the relevant chapter of this Handbook for how you might be affected.

 

1     ss3(3) and (7), 8 and 42 TCA 2002; regs 3-5 CTC Regs; reg 3 TC(R) Regs; reg 3 TC(Imm) Regs »

2     Reg 2 CTC Regs »

3     Regs 2, 4 and 5(2)-(4) CTC Regs »

4     Reg 3(1) rr1 and 2 CTC Regs »

5     Reg 3(1) r2.2 CTC Regs »

6     Reg 3(1) rr1 and 2 CTC Regs »

7     para 02202 TCTM »

8     Reg 3(1) r3.1 CTC Regs »

9     para 02204 TCTM »

10     GJ v HMRC (TC) [2013] UKUT 561 (AAC) »

Amount of child tax credit

The maximum CTC you can get is made up of:

•child element of £2,845 a year for each child. This may be subject to a ‘two-child limit’ (see below); plus
•family element of £545 a year. One family element is payable if you are responsible for a child born before 6 April 2017. If you are not responsible for a child born before 6 April 2017, your CTC does not include the family element; plus
•disabled child element of £3,435 a year for each child who gets disability living allowance (DLA), personal independence payment (PIP) or is certified as severely sight impaired or blind or was in the last 28 weeks; plus
•severely disabled child element of £1,390 a year for each child who gets the highest rate care component of DLA or the enhanced rate of the daily living component of PIP.

These are the amounts for the tax year April 2021 to April 2022. You will get less than the maximum if your income is more than a set threshold.

A ‘two-child limit’ was introduced on 6 April 2017. In general, this means that a child element is not payable for a child born on or after 6 April 2017 if you already have two or more children included in your CTC award, unless s/he is covered by the exceptions. The exceptions include some adoption and kinship care situations – see the relevant chapter of this Handbook for more information.

 

Example

Meg has two children, Bella (aged two) and Meena (aged four). Meena has asthma and gets the lowest rate care component of DLA. Meg’s maximum CTC for the tax year April 2020 to April 2021 is:

Two child elements	£2,845
	£2,845
Family element	£545
Disabled child element	£3,435
Total maximum CTC	£9,670

Whether she gets maximum CTC or a reduced amount depends on her income.

 

The income threshold is £16,480 unless you are working and eligible for WTC (see here), in which case it is £6,565. If your income is below this, you get maximum CTC. If your income is above this threshold, you get a reduced amount.

If you are entitled to CTC and are also getting income support (IS), income-based jobseeker’s allowance (JSA), income-related employment and support allowance (ESA) or pension credit (PC), you get maximum CTC.1ss7(2) and 13 TCA 2002; reg 4 TC(ITDR) Regs

For details of how income is treated and how your CTC award is calculated, see CPAG’s Welfare Benefits and Tax Credits Handbook.

See the relevant chapters of this Handbook for more information on how specific income (eg, fostering allowances and payments from the local authority) is treated.

 

1     ss7(2) and 13 TCA 2002; reg 4 TC(ITDR) Regs »