| |
| |
| Information
sheets |
| CHILDREN'S
TAX CREDIT INFORMATION SHEET |
The Children's Tax Credit was
introduced from 6 April 2001 to provide more help
for people who have a child or children aged under
16 living with them. It will reduce the income tax
that you need to pay. You will get the credit through
your tax code. You will be able to claim only one
Children's Tax Credit, even if you have more than
one child living with you.
To give more support to families on lower incomes,
the Children's Tax Credit will gradually be withdrawn
where the person claiming it pays tax at the higher
rate. It will be withdrawn at the rate of ,1 of
credit for every ,15 of income taxed at the higher
rate.
You can claim Children's Tax Credit if all of the
following three conditions apply:
1) If you have a child who lives with you for at
least part of the tax year for which you are claiming.
2) The child was under 16 years old at the beginning
of the tax year for which you are claiming.
3) The child is your own (including stepchild or
adopted child) or a child that you look after at
your own expense. It is accepted that you look after
a child at your own expense if you meet at least
half the total cost of raising the child whilst
they live with you.
You can claim for any child under 16 at the beginning
of the tax year for which you are claiming but it
usually makes sense to claim for the youngest child.
You will be able to claim only one Children's Tax
Credit even if you have more that one child living
with you. If the child doesn't live with you at
all, you cannot claim the Children's Tax Credit.
If your child lives with someone else for part of
the year and that person also claims the Children's
Tax Credit for that child, you will have to decide
between you on how you are going to share the credit.
You should contact your Inland Revenue Office for
more information or advice.
You pay Income Tax at the higher rate if your income
from all sources less allowable reliefs and deductions
is above a certain amount. Children's Tax Credit
is gradually withdrawn if either of you (or both
of you) is a higher rate taxpayer, at the rate of
,1 credit for every ,15 income taxed at the higher
rate. If you are not sure whether you pay tax at
the higher rate, contact your Inland Revenue Office.
The partner with the larger income must claim the
credit, so the credit will be withdrawn from that
partner. To make sure that your claim is correct,
you may wish to discuss this with your partner.
You will not be able to share the credit or transfer
it to the partner with the lower income.
A married couple or a man and woman living together
as husband and wife can share one Children's Tax
Credit between them as long as neither of them pay
tax at the higher rate. If you do not expect to
pay tax at the higher rate in the tax year:
1) You can decide that one of you should have the
whole credit; or
2) You can decide that you should share the credit
equally between you.
There is no tax advantage if you decide to share
the credit or if you decide that one of you should
claim the full amount, but if one of you does not
pay enough tax to use all of the credits allocated
to you, you will be able to transfer the surplus
credit to your partner only after the end of the
tax year.
Whatever you decide to do will continue as long
as neither of you start paying tax at the higher
rate or decide to change who gets the credit. To
change who gets the credit contact your Inland Revenue
Office.
Contact your Inland Revenue Office if your personal
circumstances change, as it may affect the amount
of your Children's Tax Credit, for example if you
have a baby, you separate, or you change your mind
as to how you want to share the credit. |
| back
to fact sheet menu |
|
|
| |
|
|
|
