4 |
(3) is elaborated in paragraph 10; the test is met whether the one claimant person works for 30 h a week or, in the case of a joint claim, one or more has responsibility for a child and they do at least 30 h of work between them (and one does at least 16). |
(4) is elaborated in paragraph 11 and has a separate rule if one of them is over 50-because of the 50 plus element. |
(5) is elaborated in paragraph 12, and applies where the claim is a single claim and the claimant is responsible for one or more children. |
Section 12 of the Act provides the framework legislation for the child care element as in the old WFTC and DPTC. The person must incur ‘relevant childcare charges’. Entitlement arises if and only if the person is to working tax credit. The element is restricted to 70% of the relevant charges and subject to a ceiling of £135 for one child and £200 overall; these maxima after applying the 70% rule. |
The taper rules for WTC are contained in SI 2002/2008, paragraph 7 and begin to apply earlier than the CTC rules as they start as soon as the relevant income reaches £5,060, SI 2000/2008, Reg 3(2). As a result of paragraph 7, the order in which the CTC and WTC credits are tapered away is (1) WTC other than child care (2) child care (3) CTC other than family element (4) family element. |
9.4A.4 The Non-Working Household |
This household will not be entitled to WTC but will instead received income support and the Jobseekers allowance. |
9.4A.5 Claimant’s Income |
One of the most interesting aspects of the new scheme is the calculation of the claimant’s income SI 2002/2006 contains 23 pages of detailed rules. It is interesting for three reasons First it acts a cross—check on the UK concept of income. Capital gains—and capital itself—are both ignored; the exclusion of capital is important because it was relevant in the pre 2003 scheme and emphasised the social security origins of the credit at that time. The process laid down requires one to list certain types of unearned income which are the disregarded in so far as they do not exceed £300 in total. Then one has to add together employment income, social security income, student income and miscellaneous income. Trading income is then taken into account, it being dealt with in this way so as to relieve losses. Unremittable foreign income is usually disregarded; but any other foreign income is brought in full without regard to any double tax treaty reliefs. Special exemptions or immunities are not defined but are to be disregarded (paragraph 3(6)). Deductions can be made for pension contributions and qualifying donations to charity as well as bank charges for converting foreign income into sterling 3(7). |
Secondly the sections provide an outline of taxable and non—taxable income and acts a something of a revision course in taxation. The definition of employment income (paragraph 4) takes no account of the imminent Income Tax (Earnings and Pensions Act) 2003 so all the statutory references are out of date; nevertheless one includes many fringe benefits (paragraph 4 esp 4(1) and (3). Deductions or disregards are set out in Table 1 to paragraph 4(4). Pension income (paragraph 5) is self explanatory with only a few obvious pensions being disregarded. Trading income (paragraph 6) uses the income tax measure of profits so taking full account of capital allowances but not the averaging rules for farmers and creative artists (TA 198, section 95A and 96). Paragraph 7 (Social security income) star by bringing everything in and then excluding some items; the list of exceptions includes child benefit, maternity allowance and housing benefit. Student Income (paragraphs 8 and 9) means most grants but not sums falling within TA 1988, sections 331 and 331A provisions which remain in TA 1988 and do not form part of IT(EP)A 2003 (but note sections 211–215). Paragraph 10 (investment income) is schedule D, case III and schedule F although with certain long recognised exemptions and with an express disregard for winnings |