Finance Act 1999

30 Children’s tax credit

(1) The following section shall be inserted after section 257 of the Taxes Act 1988—

“257AA Children’s tax credit

(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 £4,160.

(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.

(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.

(5) Schedule 13B (which modifies this section where a child lives with more than one adult during a year of assessment) shall have effect.”

(2) The Schedule set out in Schedule 3 to this Act shall be inserted after Schedule 13A to the Taxes Act 1988.

(3) In section 257C(1) and (3) of the Taxes Act 1988 (indexation), for the words “sections 257 and 257A” there shall be substituted “sections 257, 257AA(2) and 257A”.

(4) The [1970 c. 9.] Taxes Management Act 1970 shall be amended as follows—

(a) in section 36(3A) (fraudulent or negligent conduct), there shall be inserted at the end “or under Schedule 13B to that Act (elections as to transfer of children’s tax credit)”,

(b) in section 37A (effect of assessment where allowances transferred)—

(i) after “spouse” there shall be inserted “or partner”, and

(ii) after “Act” there shall be inserted “or paragraph 4 of Schedule 13B to that Act”,

(c) in section 43A(2A) (further assessments), there shall be inserted at the end “or under Schedule 13B to that Act (elections as to transfer of children’s tax credit)”, and

(d) in section 58(3)(b) (proceedings in Northern Ireland), after “repealed by that Act)” there shall be inserted “, paragraph 6 of Schedule 13B to that Act”.

(5) Subsections (1), (2) and (4) above have effect for the year 2001-02 and subsequent years of assessment.

(6) Subsection (3) above has effect for the purposes of the application of section 257AA of the Taxes Act 1988 for the year 2002-03 and subsequent years of assessment.