The Tax Credits and Child Trust Funds (Amendment) (EU Exit) Regulations 2019
Citation and commencement
1.
(1)
These Regulations may be cited as the Tax Credits and Child Trust Funds (Amendment) (EU Exit) Regulations 2019.
(2)
These Regulations come into force as follows—
(a)
regulation 1 comes into force on the earlier of the following—
(i)
(ii)
(b)
regulations 2 to 9 come into force immediately after the coming into force of the Social Security (Ireland) Order 2019; and
(c)
regulations 10 to 13 come into force on exit day.
Amendment of the Tax Credits (Claims and Notifications) Regulations 2002
2.
3.
(a)
in paragraph (b) after “Northern Ireland;” omit “or”; and
(b)
“or,
(d)
the Department of Employment Affairs and Social Protection in Ireland, in connection with a claim to a child tax credit made pursuant to Part IV Section 4 of the Convention on Social Security between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Ireland signed at Dublin on 1st February 20198.”.
Amendment of the Tax Credits (Income Thresholds and Determination of Rates) Regulations 2002
4.
5.
“Cases where there is a reciprocal agreement8A.
(1)
This regulation applies where the United Kingdom is competent to pay family benefits in accordance with Article 39 of the Reciprocal Agreement with Ireland but where Ireland has primary competence for payment of those benefits.
(2)
Where this regulation applies, child tax credit shall be paid at the rate according to the calculation set out in paragraph (4) of Article 39 of the Reciprocal Agreement with Ireland.
(3)
Child tax credit shall be paid on a provisional basis where—
(a)
Article 39(5) of the Reciprocal Agreement with Ireland applies;
(b)
the United Kingdom is Party B in the circumstances set out under Article 40(1)(b) of the Reciprocal Agreement with Ireland; or
(c)
the United Kingdom does not agree that it has primary competence for payment of family benefits where the child resides or the children reside in the United Kingdom and Article 63(2) of the Reciprocal Agreement with Ireland applies.
(4)
In this regulation—
(a)
“family benefits” has the meaning as set out in Article 3(1)(x) of the Reciprocal Agreement with Ireland; and
(b)
“the Reciprocal Agreement with Ireland” means the Convention on Social Security between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Ireland signed at Dublin on 1st February 2019.”.
Amendment of the Tax Credits (Payments by the Commissioners) Regulations 2002
6.
7.
“(5)
Paragraph (6) applies where the United Kingdom is competent to pay family benefits in accordance with Article 39 of the Reciprocal Agreement with Ireland.
(6)
Where Article 41(2) of the Reciprocal Agreement with Ireland applies, in the event that primary competence for payment of family benefits changes during a month, child tax credit will be paid for the remainder of that month.
(7)
For the purposes of paragraph (6), primary competence is to be determined in accordance with Article 39 of the Reciprocal Agreement with Ireland.
(8)
In paragraphs (5) to (7)—
(a)
“family benefits” has the meaning as set out in Article 3(1)(x) of the Reciprocal Agreement with Ireland; and
(b)
“the Reciprocal Agreement with Ireland” means the Convention on Social Security between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Ireland signed at Dublin on 1st February 2019.”.
Amendment of the Tax Credits (Residence) Regulations 2003
8.
9.
In regulation 3 (circumstances in which a person is treated as not being in the United Kingdom)—
(a)
“(4)
For the purposes of working tax credit a person (P) shall be treated as being ordinarily resident in the United Kingdom where—
(a)
P is exercising rights in the United Kingdom as a worker pursuant to Parliament and Council Regulation (EU) No 492/2011 or P is a person with a right to reside in the United Kingdom pursuant to the Immigration (European Economic Area) Regulations 2016; or
(b)
P satisfies the conditions in paragraph (4A).
(4A)
The conditions are that—
(a)
P is a national of the United Kingdom or is a citizen of Ireland;
(b)
P resides in Ireland; and
(c)
P is engaged in qualifying remunerative work in the United Kingdom.
(4B)
For the purposes of paragraph (4A), P is a national of the United Kingdom if—
(a)
P is a British citizen;
(b)
P is a person who is a British subject by virtue of Part IV of the British Nationality Act 198114 and is therefore exempt from United Kingdom immigration control; or(c)
P is a British Dependent Territories citizen who acquires their citizenship from a connection with Gibraltar.
(4C)
For the purposes of paragraph (4A)—
(a)
P is a citizen of Ireland if P is within the meaning of the Irish Nationality and Citizenship Act 195615; and(b)
“qualifying remunerative work” has the same meaning as it has in regulation 4 of the Working Tax Credit (Entitlement and Maximum Rate) Regulations 200216.”; and
(b)
“(7A)
A person (“P”) who is within Part IV Section 4 of the Reciprocal Agreement with Ireland will be treated as being ordinarily resident in the United Kingdom where P makes a claim for child tax credit if—
(a)
P resides in Ireland; and
(b)
P is in a relevant situation.
(7B)
Both members of a couple (“A and B”) who are within Part IV Section 4 of the Reciprocal Agreement with Ireland will be treated as being ordinarily resident in the United Kingdom where they make a joint claim for child tax credit tax if—
(a)
either —
(i)
A or B is resident in Ireland; or
(ii)
both A and B are resident in Ireland; and
(b)
either—
(i)
A or B is in a relevant situation; or
(ii)
both A and B are in a relevant situation and it does not matter if A and B are not in the same relevant situation.
(7C)
For the purposes of paragraphs (7A) and (7B), a person is in a “relevant situation” if that person is—
(a)
an employed person as defined in Article 1 of the Reciprocal Agreement with Ireland and subject to the legislation of the United Kingdom in accordance with Part II of that Agreement;
(b)
a self-employed person as defined in Article 1 of the Reciprocal Agreement with Ireland and subject to the legislation of the United Kingdom in accordance with Part II of that Agreement;
(c)
receiving a contributory benefit from the United Kingdom in accordance with Article 9(2) of the Reciprocal Agreement with Ireland;
(d)
receiving a state pension from the United Kingdom within the meaning of Article 3(1)(a)(v) of the Reciprocal Agreement with Ireland; or
(e)
receiving a survivor’s benefit from the United Kingdom within the meaning of Article 3(1)(a)(vi) of the Reciprocal Agreement with Ireland.
(7D)
For the purposes of paragraphs (7A) to (7C), “the Reciprocal Agreement with Ireland” means the Convention on Social Security between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Ireland signed at Dublin on 1st February 2019.”.
Amendment of the Child Trust Funds Regulations 2004
10.
11.
In regulation 2 (interpretation), in paragraph (1)—
(a)
(b)
““European institution” means—
(a)
(b)
an EEA firm (within the meaning of Article 2(3G) of the Financial Services and Markets Act 2000 (Gibraltar) Order 200122 of the kind mentioned in paragraph 5(a) to (d), (f) and (h) of Schedule 3 to the Financial Services and Markets Act 200023 which is an authorised person for the purposes of that Act as a result of qualifying for authorisation under paragraph 12(1) to (4) and (7) of that Schedule.”; and
(c)
““recognised UCITS” means—
(a)
a UCITS within the meaning given by section 236A of the Financial Services and Markets Act 200025; or(b)
an undertaking established in Gibraltar which is a UCITS under the law of Gibraltar implementing Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities26.”.
12.
In regulation 12 (qualifying investments for an account)—
(a)
(b)
in paragraph (2)(d) after “behalf of” insert “the government of the United Kingdom or”.
13.
The Government of the United Kingdom and the Government of Ireland entered into a Convention on Social Security, which was signed at Dublin on 1st February 2019 (“the Reciprocal Agreement”). The Reciprocal Agreement was made in the context of the UK’s exit from the European Union. Amongst other matters, the Reciprocal Agreement makes provision in relation to family benefits, which in the United Kingdom means Child Benefit, Guardian’s Allowance and child tax credit. The provisions relating to child tax credit are implemented domestically in these Regulations. These Regulations also make amendments to working tax credit rules to treat nationals of the United Kingdom or Ireland who are living in Ireland and working in the UK as meeting the residence requirements for that benefit.
These Regulations also make minor amendments to the Child Trust Funds Regulations 2004 (S.I. 2004/1450) consequential on the United Kingdom leaving the European Union in order to ensure their continued effective operation (regulations 11 to 13).
Regulation 3 amends the Tax Credits (Claims and Notifications) Regulations 2002 (S.I. 2002/2014) to provide that, in relation to a claim for child tax credit made by a person within scope of the Reciprocal Agreement, and where the United Kingdom is competent to pay this benefit, if that claim has been submitted to the Department of Employment Affairs and Social Protection in Ireland it will nevertheless be accepted by Her Majesty’s Revenue and Customs.
Regulation 5 amends the Tax Credits (Income Thresholds and Determination of Rates) Regulations 2002 (S.I. 2002/2008) by inserting new regulation 8A. This new regulation provides that where the United Kingdom is competent to pay family benefits but not by priority, child tax credit will be paid at the rate in accordance with the calculation set out in Article 39(4) of the Reciprocal Agreement. New regulation 8A also provides that child tax credit will be paid on a provisional basis where any of Article 39(5), 40(1)(b) or 63(2) of the Reciprocal Agreement apply.
Regulation 7 amends regulation 12 of the Tax Credits (Payments by the Commissioners) Regulations 2002 (S.I. 2002/2173) by inserting new paragraphs (5) to (8). Regulation 12(6) provides that where the United Kingdom ceases to be competent to pay family benefits by priority during a calendar month, Her Majesty’s Commissioners for Revenue and Customs will continue to make the payment for the remainder of that calendar month. New paragraph (8) contains definitions.
Regulation 9 makes two amendments to regulation 3 of the Tax Credits (Residence) Regulations 2003 (S.I. 2003/654). First, it substitutes paragraph (4) and inserts new paragraphs (4A) to (4C) which set out the circumstances in which a person shall be treated as being ordinarily resident in the United Kingdom for the purposes of working tax credit, which includes a person in a cross-border situation involving Ireland. Secondly, it inserts new paragraphs (7A) to (7D) which make provision in relation to persons within scope of the Reciprocal Agreement, in a cross-border situation involving Ireland, for the purposes of claiming child tax credit.
A full impact assessment has not been produced for this instrument as no impact on the private or voluntary sectors is foreseen.
A Tax Information and Impact Note has not been produced for this instrument as it contains no substantive changes to tax policy.