Explanatory Note
(This note is not part of the Regulations)
These Regulations amend five sets of Tax Credit Regulations: namely
(a)the Tax Credits (Definition and Calculation of Income) Regulations 2002 (S.I.2002/2006),
(b)the Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002 (S.I. 2002/2005),
(c)the Child Tax Credit Regulations 2002 (S.I. 2002/2007),
(d)the Tax Credits (Income Thresholds and Determination of Rates) Regulations 2002 (S.I. 2002/2008) and
(e)the Tax Credits (Claims and Notifications) Regulations 2002 (S.I. 2002/2014).
Regulation 1 provides for citation, commencement and effect.
Regulations 2 to 11 make further amendments to the Tax Credits (Definition and Calculation of Income) Regulations 2002 (S.I. 2002/2006), which define income for the purposes of working tax credit and child tax credit under the Tax Credits Act 2002 (c. 21). The Tax Credits (Definition and Calculation of Income) Regulations 2002 were previously amended by the Tax Credits (Definition and Calculation of Income) (Amendment) Regulations 2002 (S.I. 2003/732).
Regulation 2 introduces amendments to the Regulations.
Regulation 3 amends the definition of “claim” in regulation 2.
Regulation 4 amends the formula used in regulation 3 for calculating a claimant’s income, to provide for the carrying forward of trading losses to future years, and to allow losses to be taken into account where the relief provisions of section 379A and 379B of the Income and Corporation Taxes Act 1988 (“The Taxes Act”) apply It adds a third category of person to those whose foreign income is to be taken into account when making a tax credit claim. It also adds Extra Statutory Concession A9 (“ESC A9”) as a basis for deductible contributions for the purposes of calculating income.
Regulation 5 clarifies the scope of regulation 4 (employment income) and amends it to include any gain that is chargeable to income tax under Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1). It also adds categories of employment income that are to be disregarded for the purposes of income calculation, and makes some minor drafting changes.
Regulation 6 amends regulation 7 (social security income) to remove a reference to housing benefit supplement, a social security benefit that is no longer payable.
Regulation 7 amends regulation 8 to reflect the changes made to the student support system in England and Wales by the Education (Student Support) (No. 2) Regulations 2002 (S.I. 2002/3200) as amended by the Education (Student Support) (Amendment) Regulations 2003 (S.I. 2003/1065).
Regulation 8 amends regulation 10 (investment income) by adding the capital element of certain types of purchased life annuities to the table of tax credit disregards for the purpose of calculating investment income.
Regulations 9 and 10 amend regulation 11 (property income) and 12 (foreign income) so that losses to which the relief provisions of section 379A and 379B of the Taxes Act apply are taken into account in calculating property income and foreign income for tax credit purposes.
Regulation 11 amends regulation 19 (general disregards in the calculation of income) to reflect new legislative provisions in relation to foster care receipts, adoption allowances and community care payments made by local authorities.
Regulations 12 to 16 further amend the Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002, which were amended by the Working Tax Credit (Entitlement and Maximum Rate) (Amendment) Regulations 2003 (S.I. 2003/701). Regulation 12 introduces the amendments to those Regulations.
Regulation 13 amends regulation 2 (interpretation) to limit the definition of “employed”.
Regulation 14 amends regulation 9 (disability element) to clarify the conditions of eligibility for the disability element of working tax credit. It also provides continuity of entitlement to the disability element in circumstances where a claimant’s entitlement may temporarily cease.
Regulation 15 amends regulation 14 so as to remove the upper age limit in respect of eligible childcare in England and Wales provided out of school hours by a school, on school premises or by a local authority, and reflects the definition of “child” set out in regulation 14(3).
Regulation 16 amends regulation 18 (50 plus element) to clarify the conditions for entitlement to the 50 plus element of tax credit.
Regulation 17 amends regulation 2 of the Child Tax Credit Regulations 2002 to clarify the definition of advanced education in Scotland.
Regulation 18 amends regulation 4 of the Tax Credits (Income Thresholds and Determination of Rates) Regulations 2002 to add state pension credit to the list of prescribed social security benefits for the purposes of section 7(2) of the Act.
Regulations 19 to 22 amend the Tax Credits (Claims and Notifications) Regulations 2002. Regulation 19 introduces the amendments to those Regulations.
Regulations 20 and 21 amend regulations 8 and 26 respectively, making minor corrections of a clerical and drafting nature.
Regulation 22 amends regulation 33 to provide for circumstances where notices under section 17 of the Act have been issued late.