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HMRC internal manual

Tax Credits Manual

Miscellaneous (A to B): Award calculation (Introduction)

This section of the manual sets out the rules for the calculation of tax credit awards.

Once a claim has been successfully captured and passed the eligibility, verification and risk assessment stages of the claim process, the amount of the award will be calculated automatically by the computer.

Where the calculation has been carried out by the computer, results are shown in Function VIEW AWARD CALCULATION. Use ‘View Calculation’ on the Award Summary Screen in Function VIEW AWARD to access this screen. The following rules can be used to understand how the results displayed have been calculated.

In exceptional cases the award calculation has to be done manually. For further guidance on this, use TCM0284000.

Note: In some complex cases the award calculation rules are slightly different (for example, polygamous marriages).

An initial award is the first award calculation carried out for a claim.

A revised award is the award calculation carried out when a change of circumstances is notified after a claim has been awarded.

A finalised award is one where a final decision has been made on the award for the year (on completion of finalisation). The calculation for a finalised award is the same as that for a revised award.

The calculation will

  • establish the award period and entitlement periods within the award
  • establish the maximum amount of each entitlement due for each entitlement period
  • determine if income needs to be taken into account and apply taper rules if necessary
  • establish the total of each tax credit due within each entitlement period.

When an award has been calculated, a payment profile is created.

More information on award calculations can be found in the Tax Credits Technical Manual (TCTM) at ‘TCTM07001 - Calculation of entitlement: Introduction to award calculations’. For an example of an award calculation, use ‘TCTM07APPX2 - Calculation of entitlement: A Worked Example’.