Benefits for Students in Scotland Handbook
Part 1: Benefits and tax credits
Chapter 13: Child tax credit
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Chapter 13: Child tax credit

This chapter covers:

1. What is child tax credit (below)

2. Who is eligible (Cross reference)

3. Amount of child tax credit (Cross reference) 

4. Claiming child tax credit (Cross reference)

5. Challenging a decision (Cross reference)

6. Tax credits and benefits (Cross reference)

Basic facts

– Child tax credit is paid to families with children.

– Both part-time and full-time students with children can claim.

– The amount you get depends on your income, but most student support is ignored in the assessment.

– You claim from HM Revenue and Customs.

 

1. What is child tax credit

Child tax credit (CTC) is a payment made to people with children. It is administered by HM Revenue and Customs and paid whether you are working or not working. Full-time and part-time students with children are eligible to claim. You get a higher amount if you have a child with a disability. The amount of CTC depends on your income in the tax year.

Note: you cannot make a new claim for CTC if you are in a universal credit (UC) 'full service' area, unless you have not yet claimed UC and you have three or more children (Note: this exception may end from February 2019). See Cross reference. All areas in Scotland are expected to be full service by the end of 2018.


2. Who is eligible
You qualify for child tax credit (CTC) if you meet all the following conditions.Footnote You are aged 16 or over. You have a dependent child. You can get CTC for a child until 1 September after her/his 16th birthday. If s/he stays on at school, in other full-time non-advanced education or is on approved training (defined as 'Employability Fund activity'), you can get CTC for her/him until her/his 19th, or sometimes 20th, birthday.Footnote This includes during gaps between one course ending and another starting, provided the young person starts the next course. You can only continue to get CTC for a 19-year-old on a course or training which s/he was accepted on, enrolled on, or started before s/he reached 19 until s/he leaves the course or turns 20, whichever is earlier. You may be able to continue to get CTC for a young person under age 18 for 20 weeks after s/he leaves non-advanced education if s/he notifies HM Revenue and Customs (HMRC) within three months that s/he has registered for work or training with Skills Development Scotland. If your child lives with someone else part of the time, you should decide between you who has main responsibility, otherwise HMRC decides who gets CTC. You are 'present and ordinarily resident' in Britain, are not a 'person subject to immigration control' and have a 'right to reside'. You must normally have been living in the UK for three months before you claim. These terms are explained in CPAG's Welfare Benefits and Tax Credits Handbook. Overseas students can get further advice from UKCISA (see Appendix 2). Your income is not too high (see Chapter 18).

There are no special rules for students. Both part-time and full-time students can claim.


Your parent gets child tax credit for you

If you live with your parent(s), s/he cannot get CTC for you if you are in higher education. S/he can continue to get CTC for you until your 19th, or sometimes 20th, birthday if you are in full-time non-advanced education (see above). The course must be one recognised by the Scottish government and be more than 12 hours a week, on average, in term time. The course hours include tuition, supervised study, exams, practical work and any exercise or project in the curriculum. Do not count meal breaks or unsupervised study. You count as full time between courses if you are enrolled on another non-advanced course.

Your parent(s) cannot get CTC for you if you get universal credit, income support, income-based jobseeker's allowance, CTC, working tax credit or employment and support allowance in your own right.

If you live with a partner, or are married or in a civil partnership, your parent(s) can only claim CTC for you if your partner is also a young person in full-time non-advanced education or approved training.

In some circumstances, special rules apply – eg, if you are being looked after by a local authority or are in prison or a young offenders' institution.


3. Amount of child tax credit

The amount of child tax credit (CTC) you get if you are not working and eligible for working tax credit (WTC) depends on your maximum CTC and how much income you have. If you are eligible for WTC (see Chapter 14), you claim both tax credits together and the amount is worked out together. Tax credits are calculated according to a maximum annual amount that you could receive in line with the tax year (6 April - 5 April). However, often an annual award is worked out by adding together amounts calculated over separate periods within the year because, for example, you start a new claim or your circumstances change  – eg, you have another child, you cease to be a member of a couple or you start work or increase your hours. What follows, therefore, is a simplification of what is often a very complicated calculation and assumes you are claiming CTC (but not WTC) for a full tax year and have no changes in your circumstances during that year. See CPAG's Welfare Benefits and Tax Credits Handbook for the detailed rules.

HM Revenue and Customs (HMRC) has a tax credits calculator at www.gov.uk/tax-credits-calculator, where you can check how much CTC you are likely to get.


Step one: work out your maximum child tax credit

The maximum CTC you can get is made up of:

child elementof £2,780 a year for each child. Note: you cannot get a child element for a child born on or after 6 April 2017 if you are already claiming for two or more children. There are exceptions (see CPAG's Welfare Benefits and Tax Credits Handbook for these); plus family element of £545 a year. You only get this if your claim includes a child born before 6 April 2017; plus disabled child element of £3,275 a year for each child who gets disability living allowance (DLA), personal independence payment (PIP) or is certified as severely sight-impaired or blind; plus severely disabled child element of £1,325 a year for each child who gets the highest rate care component of DLA or the enhanced rate daily living component of PIP.

These are the maximum amounts for the tax year April 2018 to April 2019. They usually increase each April, although most rates are frozen for the next two years. You get less than the maximum if your income is above a set threshold.

 

Example

Mairi has two children: Daisy, aged two, and Meena, aged four. Meena has asthma and gets the lowest rate care component of DLA. Mairi's maximum CTC for the tax year April 2018 to April 2019 is: 

 

Two child elements

   £ 

 2,780

   2,780
 Family element  545
 Disabled child element  3,275
 Total maximum CTC  9,380

Whether she gets maximum CTC or a reduced amount depends on her income.

 

 

If your circumstances change so that you should gain or lose an element, tell HMRC so your award can be adjusted. If you should gain an element (eg, you have a new baby), you must tell HMRC within one month, otherwise you do not get the increase fully backdated. The exception to this is that the disabled child element and the severely disabled child elements can be fully backdated if you notify HMRC within one month of the DLA or PIP being awarded.

Other changes must be notified within one month – eg, if you stop being part of a couple. For details, see CPAG’s Welfare Benefits and Tax Credits Handbook.


Step two: getting a means-tested benefit
You automatically get maximum CTC if you are getting income support (IS), income-based jobseeker's allowance (JSA), income-related employment and support allowance (ESA) or pension credit (PC).
Step three: not getting a means-tested benefit
If you do not get IS, income-based JSA, income-related ESA or PC, you must compare your income with a set threshold. The income threshold is £16,105, unless you are working and eligible for WTC. If your income is the same as or below this, you get maximum CTC. If your income is above this threshold, you get a reduced amount. If you or your partner are working and you are eligible for WTC, the income threshold is £6,420 instead of £16,105 (and Step one includes WTC elements).
Step four: work out your income
How income is calculated for tax credits is covered in Chapter 18. A CTC award for a tax year is usually based on your income in the previous tax year. However, if you expect your income over the current tax year to be more than £2,500 lower or higher than the previous year, tell HMRC and it reassesses your tax credits. Your award is then based on the current year's income plus £2,500 if it is more than £2,500 lower than in the previous year, or based on the current year's income minus £2,500 if it is more than £2,500 higher than the previous year's award.
Step five: calculate your child tax credit
If your income is less than or the same as the threshold, you get maximum CTC. If your income is higher than the threshold, work out 41 per cent of the difference. Your CTC is the amount worked out at Step one minus 41 per cent of the difference between your income and the threshold.

Note: this simplified calculation gives an approximate amount of CTC. Amounts are actually calculated using daily rates. See CPAG's Welfare Benefits and Tax Credits Handbook for more details.


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