Child tax credit
Note: if you are not already getting tax credits, you cannot make a new claim because of the introduction of UC. However, if you are entitled to one type of tax credit (either CTC or working tax credit (WTC)), you can add the other type to it. For example, if you are getting just WTC, you can start getting CTC. You can also renew your claim for tax credits at the end of the tax year.
You may already be getting CTC when you become a kinship carer – eg, if you already have a child. If you are already getting CTC, starting to care for a non-looked-after child may increase the amount of CTC to which you are entitled.
To get CTC, you must have at least one child for whom you are responsible.1s8(2) TCA 2002 You are treated as responsible for a child if:2Reg 3(1) rr1 and 2 CTC Regs •s/he normally lives with you; or
•you have the main responsibility for her/him. This only applies if there are competing claims for CTC for the same child.
From 6 April 2017, a ‘two-child limit’ has applied to child elements in CTC (see here). Non-looked-after children in kinship care are exempt from the ‘two-child limit’ if:3Regs 7(2A), 9 and 12 CTC Regs •you have a kinship care order under section 11 of the Children (Scotland) Act 1995; or
•you are appointed as guardian under section 7 of the Children (Scotland) Act 1995; or
•you are entitled to guardian’s allowance in respect of the child/children; or
•one of the above bullet points applied prior to the child’s 16th birthday and you have continued to be responsible for the child; or
•you have undertaken care of the child/children where it is likely that otherwise s/he would have been looked after by the local authority.
This means that even if you already have two or more dependent children and you start caring for a child born on or after 6 April 2017 in one of these circumstances, you can get the child element in your CTC for the child who has come to live with you, providing you satisfy the normal conditions of entitlement.
If you give birth to a child after taking on the care of a child or children in one of these circumstances, a child in kinship care is ‘disregarded’ when applying the two-child limit.4Reg 9 CTC Regs Only one person (or one couple making 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’. HMRC says this means that the child ‘regularly, usually, typically’ lives with you.6para 02202 TCTM You do not have to be getting child benefit for the child. If a child is living with you full time and the arrangement is reasonably settled, it is very likely that HMRC will decide the child ‘normally lives with you’. This means that if someone else has been getting tax credits for the child, her/his payments will stop. If s/he has continued to get tax credits during a period when, in fact, the child has been normally living with you, HMRC may decide s/he has been overpaid and could apply a penalty to her/him if s/he failed to report the change within one month.
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 tax credits claimant. You and any other potential claimant/s can decide between yourselves who should make the claim. If you cannot agree, HMRC decides whose claim should take priority by deciding who has the ’main responsibility’ for the child.7Reg 3(1) r2.2 CTC Regs HMRC is likely to take account of:8para 02204 TCTM •whether there is a court order which states where the child should live or who should care for her/him. This is not binding on HMRC: it should consider the factual care arrangements as well as the terms of any court order;9GJ 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;
•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 you cannot get CTC because another person has the main responsibility for the child), you can ask for a mandatory reconsideration and then appeal against it (see here). If a child stops living with you, tell HMRC as soon as possible to avoid being overpaid and within one month to avoid a possible penalty.