|
What is Children's Tax Credit (CTC)?
CTC is
an Income Tax reducer which starts on 6 April 2001 as a replacement
to the Married and Additional Persons Allowances. The full
credit is worth a £520 reduction in tax compared to
the £197 of its predecessors.
However,
it is designed to support families on lower incomes and accordingly
CTC will be restricted where either member of the household
is a higher rate taxpayer. For every £15 of income taxed
at the higher rate, £1 of credit will be withdrawn.
It is eliminated altogether where either partner earns
£39,415 or more.
Who can claim it?
You can
claim the CTC if all the following three conditions
apply:
- You
have a child who lives with you for at least part of the
tax year
- The
child is aged under 16 when living with you in the tax year
- The
child is your own (including a step-child or adopted child)
or a child you look after at your expense.
If either,
or both, partners expect to pay tax at the higher rate in
2001-2002, the partner with the larger income must
claim the credit.
If neither
partner expects to pay tax at the higher rate in 2001-2002
they can decide whether one partner should claim all the credit
or divide the credit equally between them.
Implementation of CTC
- Employees
should apply for the CTC as soon as possible and preferably
before 6 April 2001. The Inland Revenue will process the
application and make an adjustment to the 2002 Tax Code.
- Self
employed people should claim it on their Self Assessment
Tax Return for the year ended 5 April 2002.
The Inland
Revenue reckon that of 4 million eligible people, less than
3 million have registered. We reckon of those who have registered
there will be plenty who shouldn't have!
CTC application
forms can be obtained by telephoning the Inland Revenue CTC
Helpline on 0845 3001036 or alternatively contact us on BlytheTax
for a form or more information.
|
