What is Child Tax Credit?

To support the families with children, Her Majesty’s Revenue and Customs (HMRC) pays Child tax credit (CTC) to them. In addition to the child benefit, a family receives the Child tax credit and they can claim it irrespective of the fact that the family is employed or not. Per the policy, the Child tax credit amount should be used for the benefit of children. Hence, parents should be alert and not miss out on THE opportunity of claiming child tax credit. The Child tax credit is beneficial for parents who have a low income and have the responsibility of at least one child. Parents can even get money for each child they are responsible for. Additional child tax credit (CTC) is available for parents if the child has a disability, and the parents are eligible for Personal Independence Payments (PIP), and Disability Living Allowance (DLA).

 Advanced Guide for Claiming your - Child Tax Credit

How much is Child Tax Credit Amount?

Child tax credit comprises of two important elements:

  • The “family element” – a family with atleast one child is eligible and the CTC is paid to the family.
  • The “child element” – this credit is paid for each child / young members in a family. The amount corresponding to the child element may be higher for children with a disability.

As part of a family element, a family can get up to £545 a year. Depending on an individual’s circumstances, they can be eligible for an extra amount above the mentioned amount. The rates for tax year 2019-2020 are:

Child Tax Credit Rates for the 2019 to 2020 Tax Year

Rates (£ per year) 2019 to 2020 2018 to 2019 2017 to 2018

Child Tax Credit family element

£545

£545

£545

Child element

£2,780

£2,780

£2,780

Disabled child element

£3,355

£3,275

£3,175

Severely disabled child element

£1,360

£1,325

£1,290

Working Tax Credit Rates

The below table is showing the maximum annual Working Tax Credit rates

Use tax credit calculator to estimate the amount you could get

Rates (£ per year) 2019 to 2020 2018 to 2019 2017 to 2018

Basic element

£1,960

£1,960

£1,960

Couple and lone parent element

£2,010

£2,010

£2,010

30 hour element

£810

£810

£810

Disabled worker element

£3,165

£3,090

£3,000

Severe disability element

£1,365

£1,330

£1,290

Childcare Element of Working Tax Credit

Below table is showing about the maximum weekly childcare costs that you could claim along with the percentage of costs that are covered.

Rates (£ per year) 2019 to 2020 2018 to 2019 2017 to 2018

Maximum eligible cost for 1 child

£175

£175

£175

Maximum eligible cost for 2 or more children

£300

£300

£300

Percentage of eligible costs covered

0.7

0.7

0.7

Tax Credits Income Thresholds and Withdrawal Rates

Below table is showing annual tax credits income thresholds and withdrawal rates

Rates (£ per year) 2019 to 2020 2018 to 2019 2017 to 2018

Income threshold

£6,420

£6,420

£6,420

Withdrawal threshold rate (%)

0.41

0.41

0.41

Threshold for those entitled to Child Tax Credit only

£16,105

£16,105

£16,105

Income rise disregard

£2,500

£2,500

£2,500

Income fall disregard

£2,500

£2,500

£2,500

Child Benefit Rates

Below table is showing weekly Child Benefit rates

Rates (£ per year) 2019 to 2020 2018 to 2019 2017 to 2018

Eldest/only child

£20.70

£20.70

£20.70

Other children

£13.70

£13.70

£13.70

Guardian’s Allowance Rates

Below table is showing weekly Guardian’s Allowance rates

Rates (£ per year) 2019 to 2020 2018 to 2019 2017 to 2018

Guardian’s Allowance

£17.60

£17.20

£16.70

Child Tax Credit Renewal

Child tax credit needs to be renewed every year for it to continue every year. You must renew your tax credits by 31 July 2019. The Tax credit office keep the family posted on what steps they need to follow to renew the tax credit. It is obvious that a family’s circumstances can change during a fiscal year, and such information, like income changes etc., need to be conveyed to the Tax credit office by calling the child tax credit helpline 0345-300-3900. Changes in a family’s circumstances can affect the tax credit amount. For example, a family can get more support if there is a reduction in the income due to any reason, or an increase in the income can result into a lower amount. Starting April 2016, the amount by which the income can vary fell from £5,000 to £2,500. Due to the revised rates, if the income goes above £2,500 and the tax credit office is unaware about the change, the family / parents will be asked to pay back the extra amount. This extra amount will either be recovered by reducing the future tax credits or a direct payment in case the CTC will not be used in the future. On the contrary, it is advantageous if the income falls by £2,500 or more as the family will be eligible for more tax credits.

To avoid any lapse, as a best practice, the Tax credit office should be informed within 30 days of when the family receives the extra money. It becomes easy for the office to compute the tax credit adjusted and nullifies the chances of an overpayment or tax credit reversal.

Making a New Claim for Child Tax Credit

You are eligible to make a new claim for Child Tax Credit once you get severe disability premium, or got it in the earlier month and are still qualified for it.

What you’ll get

The amount that you could achieve depends on when your children has born.

If all your children were born before 6 April 2017

You are eligible to get ‘child element’ of Child Tax Credit for all of your children.

You’ll also get the basic amount, known as the ‘family element’.

If one or more of your children were born on or after 6 April 2017

You might get the benefits for up to 2 children. You can also get child element for more children in some exceptional cases.

You’ll only get the family element if at least one of your children was born before 6 April 2017.

Child Tax Credit – If you’re already claiming

The amount of child tax credit you’ll get depends on your situations. You should inform HM revenue and customs in case your situations get changed.

Conditions 1- Your claim started before 6 April 2017

  • You’ll get the basic amount of Child Tax Credit, also identified as ‘family element’
  • The ‘child element‘ for the children born before 6 April 2017

When you claim started on or after 6 April 2017

In general you’ll get the child element for up to 2 children. In exceptional apply you might get the same for more children.

For achieving family element at least one of your children should born before 6 April 2017

In case all your children were born before 6 April 2017

You get the child element for all your children. You’ll also achieve the basic amount, known as the ‘family element.’

Child Tax Credit Rates for the 2019 to 2020 Tax Year

Element Yearly amount

The basic amount (also known as ‘the family element’)

Up to £545

For each child (also recognized as ‘the child element’)

Up to £2,780

For each disabled child

Up to £3,355 (on top of the child element)

For each severely disabled child

Up to £1,360 (on top of the child element and the disabled child element)

How to Claim Child Tax Credit

To claim CTC, a family must be responsible for a child or a dependent young member in the family. “To be responsible” is defined as:

  • The child or dependent ‘normally lives with the family’; or
  • If the child lives with multiple families, then the responsibility shifts with the family that has the ‘main responsibility’

A family can’t get CTC for a child or young person who is:

  • Aged 16 or over, and getting income support, income-based jobseeker’s stipend, inability benefit, employment allowance , support allowance, or tax credits in their own right
  • Aged 16 or over, have discontinued full-time non-advanced education or permitted training, on recorded of a qualifying body, but then taking up paid work for 24 hours or more a week during the extension period of 20 week
  • Serving a custodial punishment greater than 4 months made compulsory by a court

If a child is living under the terms of a residence order, or special guardianship order, or the child is adopted, the family is treated responsible for the child, even if the local authority is making a discretionary payment, because the local authority is no longer “taking care / looking after” the child.

The Child tax credit is paid by HM Revenue and can be claimed through form - TC600. The form is available from the local HM Revenue office or the child tax credit telephone number, 0345-300-3900. Couples (this includes same sex partners) ought to make a joint claim. If a family has already been claiming tax credits, they need to call the CTC helpline to update their claim.

The Main Responsibility Test

This is a test applied, when there are challenging claims. In such cases, HMRC will make the decision, if both parties involved can’t decide mutually. When deciding on main responsibility, the factors HMRC take into account include the following:

  • Who the child is living with and where are the major belongings of the child kept such as clothes and toys
  • Who is responsible for the daily expenses for the child such as clothes, food, books, and others
  • Who is the primary contact person in case of emergency in the school, nursery or childcare provider
  • Who is responsible for the health care and cleanliness of the child. This may include doctor or dentist appointments
  • What is the registered address in schools, and other places
  • Who has legal custody of the child

How to Apply for Child Tax Credit?

For parents who are claiming the child tax credit for the first time will be required to complete the Child tax credit form application, TC600. Parents will have to give details of all the income for the previous tax year along with the national insurance and Child Benefit numbers. In-case of an issue with the child tax credit form/procedures, parents can refer to the notes that come with it, or call the Tax Credits Helpline, or get advice from an adviser.

Changes to the Child Tax Credit

Once you get any changes in your family life you must inform the same to Child Benefit Office. Otherwise you might not get the full benefits, otherwise you could get overpayment where later you need to pay the extra money back.

If your Child’s Circumstances Change

Once your child leave approved education or training the benefits will get stops on or after 31 August of his/her 16th birthday.

Inform Child Benefit Office:

  • Using the online service you should tell the Child Benefit office that your child is staying in approved education or training after the age of 16. A Government gateway user id and password is required to use the online service.
  • Tell Child Benefit office about your child who has left approved education or training after the age of 16.

Tell Child Benefit office clearly once your child:

  • If your child has started paid work for 24 hours a week or more.
  • Once your child stays away from you either for 8 weeks in a row or more than 56 days for a period of 16 weeks.
  • In case your child moves to abroad permanently or for more than 12 weeks.
  • moves to or from Northern Ireland
  • Once your child will be in hospital or residential care for above 12 weeks.
  • dies
  • changes their name
  • changes their gender
  • goes missing
  • If your child gets married, starts forming a civil partnership or stay with a partner.
  • Once your child started getting few aids like Income Support, Jobseeker’s Allowance, Universal Credit, Tax Credits or Employment and Support Allowance.
  • If the child goes to jail for more than a period of 8 weeks.

For any other changes to your child’s conditions you should inform to Child Benefit Office. Include the date of the change.

If Your Family’s Circumstances Change

Once the circumstances of your family gets changed

Benefits like tax credits etc. might get affected when the conditions of your family gets changed.

You must tell the Child Benefit Office straight away if:

  • Once there is a change in your bank account, name or address In case you change your gender
  • a relationship ends
  • Once you start a new relationship, like you’ve started staying with a new partner or you’ve remarried
  • In case the parent of the child gets died
  • You intend to go overseas for more than a period of 8 weeks
  • You or your partner intend to move overseas permanently or for a period of over a year
  • you’re a Crown servant leaving the UK for a posting abroad
  • you move to or from Northern Ireland
  • In case you’ve a baby, or a child comes to live with you
  • When payments or assistances for a child who does not stay with you has got stopped or changed
  • When you’re paid to take care a child by the local council or something similar to that.
  • The status of your immigration gets changed
  • In case you’ve lost the right to stay in the UK
  • When you get a punishment of prison of more than a period of 8 weeks

For any other changes to your family life you must inform to the Child Benefit Office. Include the date of the change.

Tax Credits to be Replaced by Universal Credit

Tax credits seem to be phasing out and will soon be replaced by Universal credits. This new benefit will be introduced in stages over the next few years. Essentially, the new Universal Credit will be given as a single payment every month and will include standard allowance plus other elements such as childcare, children, and housing. Hence, the amount an individual will get will depend on their circumstances. Currently, an individual will only need to claim universal credit as an alternative of tax credits if:

  1. An individual starts to live with a partner who already receives Universal Credit
  2. An individual looses the job and is residing in an area where Universal Credit is being introduced

From April 2017, for making a new claim for Universal Credit, there are policies to limit support to the initial two children and the first child premium may no longer be available.

Child Tax Credit Payment

CTC can be paid directly into the building society account or the bank, or into a post office card account. Parents can choose to have it paid weekly or monthly.

Child Tax Credits Helpline Number:

The main telephone number is the child tax credit helpline is: 0345 300 3900 (textphone 0345 300 3909). From abroad, you can ring +44 2890 538 192 for child tax credit help regarding child tax credit form, procedure and more issue.

Mondays to Fridays, the Child Tax Credits Helpline is open from 8am-8pm, on Saturdays 8am-4pm and on Sundays 9am -5pm. (It is closed on Christmas Day, Boxing Day and New Year’s Day).

Your Partner – DNS Accountants

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