Determination of rate of child tax creditU.K.
8.—(1) In relation to a person or persons entitled to child tax credit, the rate shall be determined by finding the rate for each relevant period and, where necessary, adding together those rates.
(2) “Relevant period” means—
(a)in the case of a person or persons entitled to child tax credit only, any part of the period of award throughout which the maximum rate at which he or they may be entitled to the tax credit remains the same;
(b)in the case of a person or persons entitled to both child tax credit and working tax credit, any part of the period of award throughout which the maximum rate of child tax credit to which he or they may be entitled remains the same and both sub-paragraphs (a) and (b) of regulation 7(2) are met.
(3) The rate for each relevant period shall be found in accordance with the following steps—
Step 1 — finding the daily maximum rate for each element
For each element of the tax credit to be included in the case of the person or persons entitled to the tax credit, find the daily maximum rate using the following formula—
where— “MR” is the maximum rate in relation to that element for the tax year to which the claim for the tax credit relates;
“N1” is the number of days in that tax year.
Step 2 — finding the maximum rate for the relevant period for each element
For each element of the tax credit to be so included, find the amount produced by multiplying the maximum rate (found under Step 1 and rounded up to the nearest penny) by the number of days in the relevant period.
Step 3 — finding income for the relevant period
Find the income for the relevant period by using the following formula—
where— “I” is the relevant income for the tax year to which the claim for the tax credit relates;
“N1” is the number of days in that tax year;
“N2” is the number of days in the relevant period.
Step 4 — finding the threshold for the relevant period
Find the amount produced by the following formula—
where— “N1” is the number of days in that tax year;
“N2” is the number of days in the relevant period.
The threshold for the relevant period is—
(a)in the case of a person or persons entitled to child tax credit only, that amount;
(b)in the case of a person or persons entitled to both child tax credit and working tax credit—
(i)that amount; or
(ii)if greater, the lowest amount of income for the relevant period (found under Step 3) which, disregarding regulation 9, would result in a determination in accordance with regulation 7 providing for no rate of working tax credit in his or their case for that period.
Step 5 — finding the amount of the reduction of the elements of the tax credit (other than the family element)
Find the amount (if any) which is 37% of the amount by which the income for the relevant period (found under Step 3 and rounded down to the nearest penny) exceeds the threshold for the relevant period (found under Step 4 and rounded up to the nearest penny).
Step 6 — reducing the elements of the tax credit (other than the family element)
If the amount found under Step 5 (rounded down to the nearest penny) is less than the total of the amounts found under Step 2 for the elements of the tax credit (other than the family element), deduct the amount found under Step 5 (rounded down to the nearest penny) from the total of those amounts.
Step 7 — reducing the elements of the tax credit (other than the family element) to nil
If the amount found under Step 5 (rounded down to the nearest penny) is equal to or exceeds the total of the amounts found under Step 2 for the elements of the tax credit (other than the family element), reduce the total of those amounts to nil.
Step 8 — finding the amount of the reduction of the family element
Find the amount (if any) which is 6.67% of the amount by which the income for the relevant period (found under Step 3 and rounded down to the nearest penny) exceeds—
(a)in any case where the total of the amounts found under Step 2 for the elements of the tax credit (other than the family element) would be reduced in accordance with Step 7 to nil if the relevant income were £50,000 or less, “X”;
(b)in any other case, “Y”;
where—
“X” is the amount found in accordance with Step 9 and rounded up to the nearest penny;
“Y” is the lowest amount of income for the relevant period (found under Step 3 and rounded up to the nearest penny) which would result in the total of the amounts of the elements of the tax credit (other than the family element) being reduced to nil in accordance with Step 7.
Step 9 — finding “X” for the purposes of Step 8
Find “X” using the following formula—
where— “N1” is the number of days in that tax year;
“N2” is the number of days in the relevant period.
Step 10 — reducing the family element
Deduct any amount found under Step 8 (rounded down to the nearest penny) from the amount found under Step 2 for the family element.
Step 11 — finding the rate for the relevant period
Add together—
(a)the total of the amounts found under Step 2 for the elements of the tax credit (other than the family element) after any reduction in accordance with Step 6 or Step 7; and
(b)the amount found under Step 2 for the family element after any reduction in accordance with Step 10.
This is the rate for the relevant period.
(4) “The family element” means the family element of child tax credit within the meaning given by section 9(3) of the Act.
Commencement Information
I1Reg. 8 in force (1.8.2002) for specified purpose and in force (1.1.2003) for further specified purpose, otherwise (6.4.2003) for all other purposes.