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Fri 30-Jan-04 12:47 PM by jean
Has everyone seen / are all local authorities aware or following paragraph 1503 of the DWP guidance on tax credits?
It is in pdf available from the toolkit section of this website, but states:
HB/CTB: A guide to the new tax credits
Amdt 10 August 2003
Section 15
1500-1504
Calculating income from tax credit awards: awards revised during course of tax year
1500 Revised tax credit award notices may be issued during the course of the tax year for a variety of reasons, for example
an increase in wages
the birth of a child
a child returning to relevant education after age 16
All these circumstances can result in a change in the amount of tax credit due for the remainder of the year.
1501 However, other changes, which may also generate the issue of a revised notice, will not result in a change in the amount of the award. Such changes may be a change of
address
bank details, etc
1502 You may already be aware of the change and have reassessed the HB or CTB claim accordingly. However different rules apply to the reporting of a change of circumstance that affects a tax credit claim. Therefore the change in the tax credit award may take
place at a different time.
1503 The important points to remember are:
the relevant date that decides when you will take change of circumstance action is the date the final instalment at the unrevised rate is paid. It is not the date the tax credit award actually changes
you use the amount of the tax credit award that is due to be paid, ie after the deduction of any overpayment, to calculate the average weekly income
any arrears paid are treated as capital. Disregard them for 52 weeks only if they have been paid because of a change of circumstance in the tax credit claim. You should disregard them even if they appear to be paid in instalments over the remainder of the award period
the award notice may indicate that some money has already been paid, if appropriate, see examples in Revised awards, later in this section. Deduct this sum from the relevant award, do not add it to that total. It is not a payment of capital as it is money that
has already been paid to the claimant. Once you have deducted it from the relevant sum it should be ignored.
1504 The information shown on an award notice giving details of a revised award should provide you with all the information you require to deal with the claim. However, in some circumstances, you may need to contact the Inland Revenue helpline.
HB/CTB: A guide to the new tax credits
August 2003 Amdt 10
Section 134
1505-1509
1505 The following paragraphs provide information about
what information should be found on a revised award notice
how to interpret that information
when to contact the helpline
what information to request from the helpline
New awards
1506 When you receive a tax credit award notice you should check the notice to see if it is a new or a revised award. If it is a new award, see
Section 13: Calculating the amount of income tax to take into account
Section 14: Calculating the amount of income tax to take into account: award made after start of tax year depending on whether award is for a complete or part tax year
Revised awards
1507 If it is a revised award, check to see if the amounts of the awards shown on Page 1 of the award notice have changed.
1508 If No
the revised notice has been issued because of a change of circumstance that has not affected entitlement, eg a change of bank account or address etc. You need take no further action.
1509 If Yes
which tax credit award has changed CTC/WTC/both (the childcare element should be treated as part of the award with which it is paid)
- if the total amount due for the year for one of the tax credits has not altered (shown on pages 1 and 3) do not alter the amounts being taken into account for that credit, even if the amounts of the instalments have altered
HB/CTB: A guide to the new tax credits
Amdt 10 August 2003
Section 15
(1509)-1510
(1509) Example
Original Award notice showed Child Tax Credit due: £1991.04
A first payment of £153.24 will be paid by girocheque on 28th April
Your payments will then change to £153.15 every 4 weeks
Revised award notice issued shows
Child Tax Credit due: £1991.04
Paid: £153.24
Balance to be paid:£1837.80
A first payment of £53.48 will be made on 21/05/2003 and paid by girocheque
A further payment of £148.73 will be paid by girocheque
Your payments will then change to £148.69 every 4 weeks
The overall child tax credit award has not changed so your original calculation(£1991.04 χ 366 x 7 = £38.08 per week) would still be correct.
1510 However, if the total award for a tax credit has increased, use the following example to help you decide how much tax credit to take into account
Example
A family with one child and in receipt of CTC have another baby on
11 August. They advise the Inland Revenue on 15 October and a revised award notice is issued on 21 October and sent immediately to you.
Original Award notice showed
Child Tax Credit due: £1991.04
A first payment of £153.24 will be paid by girocheque on 28th April
Your payments will then change to £153.15 every 4 weeks
Revised Award Notice shows
Child Tax Credit due: £3289.84
Paid: £1072.14
Balance to be paid: £2217.70
A first payment of £385.86 will be made by girocheque on 21/10/2003
A further payment of £305.34 will be made on 10/11/2003
Further payments of £305.30 will be made every 4 weeks
Do not reassess the amount of child tax credit you took into account for the period prior to 14 October.
HB/CTB: A guide to the new tax credits
August 2003 Amdt 10
Section 15
(1510)-1514
(1510) As the regular instalment for October would have been paid on 13 October, you know that the instalment paid on 21 October is a payment of arrears. Therefore it is treated as capital and, as it is paid as a result of a change of circumstance in the tax credit claim, disregarded for 52 weeks.
The payment made on 10 November is the first instalment at the revised amount so you know from this that the final instalment at the unrevised amount was made four weeks earlier (on 13 October).
The change of circumstances occurs on Tuesday 14 October and takes effect on Monday 20 October. The amount to take into account is:
the new award £3289.84 less amount already paid £1072.14
arrears paid £ 385.86
£1458.00
£1831.84
Divide this amount by the number of days in the period 14 October (day after last instalment of unrevised amount paid) to 5 April (last day of tax year) = 176 and multiply by 7: 1831.84 χ 176 x 7 = £72.85
1511 If you receive a further revised award notice take action as above, but remember you only need to reassess entitlement if the annual amount of the tax credit alters.
1512 If there is a predictable change during the remainder of the award please take action as outlined in Section 14: Case Study D: Charles Onassis.
1513 If the total award for a tax credit has decreased, use the example above to help you decide how much tax credit to take into account, ie by deducting the amount already paid from the annual award. You do not need to reassess the tax credit income for the
earlier period your calculation was correct at the time and any overpayment of tax credit will be adjusted in future awards.
Contacting IR Helpline
1514 Contact the IR Helpline (on the number given in the Dear Benefit Manager letter dated 1 April 2003) to
check if an award has been made in respect of a claimant; or
obtain the information needed to calculate the amount of tax credit to take into account
- when assessing a claim for HB/CTB and
- it is not possible to calculate the amount using the information in this handbook with either the original award notice or the revised notice
HB/CTB: A guide to the new tax credits
Amdt 10 August 2003
1515 Only request the information necessary to calculate the tax credit income. Do not use the helpline to obtain details of how the award has been calculated, for example the child tax credit award is £1991.04 and you believe the correct amount should be £1990.
1516 If there has been a mistake in the tax credit award, a revision will be made at a later date. It is the tax credit amount in payment at the time you do the HB/CTB assessment that decides the amount you should take into account.
1517-1599
Section 15
1515-1599
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