CPAG in Scotland Tax Credits Project: Factsheet 12

Child Tax Credit for IS and JSA Claimants

Introduction

This leaflet covers child tax credit (CTC) for people who are claiming income support (IS) or income-based job–seeker’s allowance (JSA).

Before tax credits were introduced, people claimed IS and JSA for the whole family including the children. Now people claim IS or JSA for themselves and their partner, and claim CTC and child benefit for any children in the family.

People who have been getting IS or JSA since before 6 April 2004 may still be getting child additions in with these benefits, rather than claiming CTC. They will eventually be transferred onto CTC. This group can decide to claim CTC now rather than waiting until they are transferred. However, some but not all claimants may be better off financially by claiming now. For more information about this and the transfer to CTC generally see CPAG in Scotland’s leaflet Claiming for Children: Changing to CTC from IS or JSA.

Claiming child tax credit

You claim child tax credit on form TC600. This is available from the Tax Credits Helpline (0845 300 3900, textphone 0845 300 3909). If you are also claiming IS or JSA, you can make a fast-tracked claim for tax credits at the Jobcentre Plus office.

If you are part of a couple (ie, if you are married or registered civil partners or are living together as though you were married or civil partners) you must make a joint claim. You make a single claim if you are not a member of a couple.

Your claim needs to be renewed each year. Annual Review and Declaration forms are sent out in May and June, after the end of the tax year. These forms ask you to confirm your income and circumstances for the previous year. The forms also renew your claim for the year ahead. For more information on renewals see CPAG in Scotland’s leaflet Tax Credits Annual Review.

Getting paid

Payments are usually made direct into a bank, building society or Post Office card account. You can decide whether you want payments to be made at weekly or four weekly intervals. The Revenue can make payments by other methods and at different intervals but will only do so in exceptional circumstances. You will normally be given 8 weeks in which to supply your account details but this can be extended if you have a reasonable excuse for failing to provide details within the time limit. Usually your claim will cease until you provide details of your account.

Who qualifies for child tax credit

• be at least 16 years old
• be responsible for a child (or children)
• pass the residence and immigration tests

You can claim for a child under the age of 16. If the child leaves school at 16, you can claim until 31 August after their 16th birthday (sometimes longer if a 16 or 17-year-old registers with the Careers Service). If the child stays on at school or full-time, non-advanced education or certain kinds of training, you can usually claim until they leave, but not beyond their 20th birthday. For more information, see CPAG in Scotland’s leaflet Parents Claiming for Young People in Further Education or Training (PDF file).

If your child lives in two households and two people want to claim for the child, you can decide between you who makes the claim. If you cannot agree, the Revenue will choose for you based on who they think has main responsibility.
 
If you are already claiming IS or JSA you will usually also meet the residence and immigration conditions for claiming child tax credit.

How much child tax credit?

Child tax credit awards are made up of a number of elements. Different elements apply depending on how many children there are and whether any child is under one year old or has a disability.

Adding together the elements for your circumstances gives you the maximum tax credits award. If you are on IS, income-based JSA (or pension credit) you automatically get the maximum award.

To calculate your weekly entitlement you work out which elements apply, add together the daily rates of each element that applies and multiply by 7. This gives you your weekly child tax credit entitlement.

You can use the chart below to work out the weekly amount of the maximum award. You might get less than this if the Revenue is recovering a previous overpayment (see below).

Normally, tax credits are calculated using annual amounts as a starting point. Daily rates are then calculated by dividing the annual amounts by the number of days in the year – 365 or 366 – and rounding up to the nearest penny.

Recovery of overpayments

If you have been overpaid tax credits, the Revenue will usually want to recover this by making deductions from your ongoing award. So if you are getting less than the amounts set out above it may be that you are having an overpayment deducted from your current benefit.

For IS and income-based JSA claimants, the maximum amount which the Revenue should deduct from an ongoing award for the same household is 10%.  If you are having more than 10% deducted you should contact the helpline about this. For more information about overpayments, including how to challenge them, see CPAG’s leaflet What to do if the Revenue decides you have been paid too much tax credit.

Changes of circumstances

It is important to tell the Revenue if your circumstances change. If you fail to inform the Revenue this could result in building up an overpayment or underpayment or, in some circumstances, result in a penalty being imposed.

You must tell the Revenue when

• You stop being a single claimant (eg, you start living with a partner) or you stop being a joint claimant with the partner you were claiming with
• You or your partner leave the UK to live abroad or are absent for more than the allowed temporary absence (usually 8 weeks)
• You or your partner lose the right to reside in the UK
• You are no longer responsible for a child
• The circumstances of the child(ren) you are claiming for change, so that they should no longer be included in the claim (eg, when they leave education or training).

The Revenue has the power to impose a £300 penalty if you fail to notify these events within one month. There may also be a £60 per day penalty for continuing failure. 

Other changes

There are other changes which do not have penalties attached but which it is in your interest to report. These include where a child joins the household (for example the birth of a new baby) and where a child loses or gains entitlement to the disability or the severe disability element.

Where changes of circumstances increase your maximum entitlement (because you would become eligible for additional elements) it is important to report these as soon as possible because the increase can usually only be backdated for up to three months.

Where changes decrease your maximum entitlement (eg, where a child loses entitlement to the disability element) it is important to inform the Revenue to avoid an overpayment building up.

Changes in income

Whilst you are claiming IS or income-based JSA you are automatically entitled to the maximum CTC. If your IS or income-based JSA stops eg, because you start work, your tax credit award will be reassessed and you may be able to claim working tax credit (WTC) as well as CTC.

Because WTC is for people who are working more than 16 (or sometimes 30) hours per week, you do not usually qualify for WTC and IS or income-based JSA at the same time. However in certain circumstances, for example when you are off sick or on maternity leave, you may be able to claim both. In this case it is important to inform the Revenue of any changes of circumstances which will affect your WTC claim. For more information see CPAG in Scotland’s leaflet Tax Credits – Reporting Changes of Circumstances.

The Revenue has a checklist of changes you should look out for form TC602(SN) available at
www.hmrc.gov.uk/menus/tc602_sn_01-06.pdf.

Further information and advice

CPAG in Scotland Tax Credits Project summary webpages

Child Poverty Action Group in Scotland
0141 552 0552 advice line for advisers on benefits and tax credits,
Monday, Tuesday, Wednesday and Thursday 10am to 12pm

Email: advice@cpagscotland.org.uk
email advice for advisers on benefits and tax credits

Website: www.cpag.org.uk/scotland/taxcredits/
for more tax credit leaflets from CPAG in Scotland

CPAG publishes the Welfare Benefits and Tax Credits Handbook, a comprehensive guide to benefits and tax credits for claimants and advisers.

CPAG in Scotland’s advice line is only for advisers. If you are having problems with your own tax credit or benefit claim and are in need of advice you should contact your citizens advice bureau or other local welfare rights service.

HM Revenue and Customs (formerly the Inland Revenue)
Tax Credit Helpline 0845 300 3900
(textphone 0845 300 3909)

© Child Poverty Action Group, June 2007
CPAG in Scotland’s Tax Credit Project is funded by the Scottish Executive.

This fact sheet was last updated May 2007