News and Views
New Tax Credits claim deadline

Two new tax credits were launched on 6th April 2003, Child Tax Credit (CTC) and Working Tax Credit (WTC).

The CTC brings together the current children's tax credit and child elements of other currently available allowances. The child, aged 16 and under, or the young person, anyone aged 16,17 or 18 and in full time education, for whom a claim is made must live with the claimant. The allowance, £1,445 per child plus family element of £545 per family will be paid directly to the main carer, usually the mother in addition to the Child Benefit.

One of the elements of the CTC is reimbursement of childcare of up to £94.50 per week (£140 if more than one child) for parents who both work for at least 16 hours a week and the care is provided by an approved home carer, child minder or at a out of school club.

The WTC will take over the adult element of the Working Families Tax Credit and will be paid through the wage packet.

The entitlement to CTC and WTC will be calculated by reference to the combined income of both partners and will be reduced progressively by 37p for every £1 of additional income over £5,060.

What does this mean in real terms? To give some examples; tax credit of some £1,960 is available for a family with one child and annual income of £15,000. Tax credits of £2,190 are available for a family with two children, childcare costs of £180 p w and income of £36,000 p a. In fact families with income of up to £50,000 per annum will receive at least the family element.

Claims for the new tax year commencing 6th April next made after 6th July 2003 will result in loss of tax credits. This is because claims can only be backdated by up to three months. Do remember that once the claim is made any important changes, such as marriage, birth of a child change of employer or increase in annual income of over £2,500 have to be notified to the Inland Revenue.