(1)If a qualifying child (or more than one) is resident with the claimant during the whole or part of the year of assessment, the claimant shall be entitled to an income tax reduction, to be known as a children’s tax credit.
(2)The reduction shall be calculated by reference to [F2£5,200].
[F3(2A)For a year of assessment during the whole or part of which a qualifying baby (or more than one) is resident with the claimant, subsection (2) above has effect as if the amount specified there were increased by £5,200.]
(3)Where any part of the claimant’s income for the year of assessment falls within section 1(2)(b), his children’s tax credit for the year shall be calculated as if the amount specified in subsection (2) above were reduced by £2 for every £3 of that part of his income.
[F4(3A)Where subsection (2A) above applies, the reference in subsection (3) above to the amount specified in subsection (2) above is to the higher amount applicable by virtue of subsection (2A) above.]
(4)In this section “qualifying child” means, in relation to a person—
(a)a child of his who has not attained the age of 16, or
(b)a child who has not attained the age of 16 and who is maintained by, and at the expense of, the person for any part of the year of assessment;
and “child” includes illegitimate child and stepchild.
[F5(4A)In this section “qualifying baby”, in relation to a year of assessment, means a qualifying child born in that year.]
(5)Schedule 13B (which modifies this section where a child lives with more than one adult during a year of assessment) shall have effect.]
Textual Amendments
F1S. 257AA inserted (with effect in accordance with s. 30(5) of the amending Act) by Finance Act 1999 (c. 16), s. 30(1)
F2Words in s. 257AA(2) substituted (with effect in accordance with s. 52(2) of the amending Act) by Finance Act 2001 (c. 9), s. 52(1)
F3S. 257AA(2A) inserted (with effect in accordance with s. 53(6) of the amending Act) by Finance Act 2001 (c. 9), s. 53(1)
F4S. 257AA(3A) inserted (with effect in accordance with s. 53(6) of the amending Act) by Finance Act 2001 (c. 9), s. 53(2)
F5S. 257AA(4A) inserted (with effect in accordance with s. 53(6) of the amending Act) by Finance Act 2001 (c. 9), s. 53(3)
Modifications etc. (not altering text)
C1S. 257AA(2) amended (2002-03) by S.I. 2002/707, art. 2(3)