Income and Corporation Taxes Act 1988

Valid from 27/07/1999

Child living with more than one adult: married and unmarried couples U.K.

1 (1) Paragraphs 2 to 5 below apply where at any time in a year of assessment—

(a) a husband and wife are living together or a man and a woman are living together as husband and wife, and

(b) a relevant child is resident with them.

(2) In those paragraphs—

(a) the husband and wife, or the man and the woman, are referred to as the partners,

(b) “the higher-earning partner” means the partner who has the higher total income for the year of assessment,

(c) “the lower-earning partner” means the partner who has the lower total income for the year of assessment, and

(d) “relevant child” means a child who is a qualifying child in relation to both partners.

(3) If the partners have the same total income for the year—

(a) they may elect that one of them be treated for the purposes of paragraphs 2 to 5 below as the lower-earning partner, and

(b) if they do not make an election, neither shall be entitled to a children’s tax credit for the year in respect of a relevant child.

2 Subject to paragraph 3 below, the lower-earning partner shall not be entitled to a children’s tax credit for the year in respect of a relevant child.

3 (1) This paragraph applies if no part of either partner’s income for the year falls within section 1(2)(b).

(2) If the lower-earning partner makes a claim for a children’s tax credit for the year in respect of a relevant child—

(a) paragraph 2 above shall not apply, and

(b) in calculating the credit for each partner, the amount mentioned in section 257AA(2) shall be halved.

(3) If the partners make an election under this sub-paragraph—

(a) paragraph 2 above shall not apply, and

(b) the higher-earning partner shall not be entitled to a children’s tax credit for the year in respect of a relevant child.

4 (1) This paragraph applies where—

(a) a partner is entitled to a children’s tax credit for a year of assessment,

(b) the amount by reference to which his credit falls to be calculated (Amount A) exceeds the amount which would be necessary, in accordance with section 256(2), to reduce his liability for the year to income tax on his total income to nil (Amount B), and

(c) he gives notice to an officer of the Board under this paragraph.

(2) Where the other partner would not, by virtue of paragraph 2 or 3 above, be entitled to a children’s tax credit for the year in respect of a relevant child—

(a) he shall be entitled to a children’s tax credit in respect of a relevant child notwithstanding that paragraph, and

(b) the amount by reference to which his credit shall be calculated shall be the amount of the difference between Amount A and Amount B.

(3) In any other case, the difference between Amount A and Amount B shall be added to the amount by reference to which children’s tax credit would otherwise be calculated for the other partner in respect of a relevant child.

(4) A notice under this paragraph—

(a) must be given on or before the fifth anniversary of the 31st January next following the end of the year of assessment to which it relates,

(b) shall be in such form as the Board may determine, and

(c) shall be irrevocable.

5 (1) This paragraph applies to elections under paragraph 3 above.

(2) An election—

(a) shall be made by giving notice to an officer of the Board in such form as the Board may determine, and

(b) may be made so as to have effect for a single year of assessment or for two or more consecutive years.

(3) Subject to sub-paragraph (4) below, an election must be made before the first year of assessment for which it is to have effect and on the basis of assumptions about the partners’ incomes for that year.

(4) An election may be made, on the basis of such assumptions, at a time during the first year for which it is to have effect if—

(a) the election is made within the first 30 days of that year and an officer of the Board has been given written notification before that year that the election will be made, or

(b) the partners marry in that year, or

(c) the partners start to live together as man and wife in that year, or

(d) a relevant child becomes resident with the partners in that year and no relevant child has previously in that year been resident with the partners, or

(e) it is assumed that the partner who was the higher-earning partner in the previous year will be the lower-earning partner in that year.

(5) An election may be withdrawn—

(a) by the making of another election which supersedes the first, or

(b) by notice given to an officer of the Board, in such form as the Board may determine, by either partner.

(6) A withdrawal shall have effect for the year of assessment in which it is given and subsequent years.

(7) If the higher-earning partner for one year of assessment (Year 1) is the lower-earning partner for the next year (Year 2), an election having effect for Year 1 shall not have effect for Year 2 or subsequent years.