Child tax credit

Note: child tax credit (CTC) is affected by the introduction of UC (see here). It is no longer possible to make a new claim for CTC, although a client may be able to get it for the first time if they already receive working tax credit (WTC). It is not possible to be entitled to CTC and UC at the same time. A claim for UC causes CTC to be terminated.

CTC is paid to clients who are responsible for a child or qualifying young person (see here). A client counts as responsible for a child if the child normally lives with them. CTC is affected by the ‘two-child limit’, meaning that your client may not get CTC in respect of third or later children born after 5 April 2017.

CTC is paid in addition to child benefit and can also be paid alongside most other benefits. People entitled to income support (IS), income-based jobseeker’s allowance (JSA), income-related employment and support allowance (ESA) or pension credit (PC) automatically get maximum CTC, but it counts as income for housing benefit (HB), except for people who are have reached the qualifying age for PC (see here).

CTC is claimed from and paid by HMRC and is means tested. The means test for tax credits is different from that for benefits, and is based on annual income. CTC is not taxable.