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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.

Note: From 6 April 2017, customers will only get the Family Element of Child Tax Credit where they are responsible for a child or children born before that date.

Note: All children/qualifying young persons should be added to the award. Customers will still receive the childcare and/or disability element for all children/qualifying young persons if they are entitled, even if they are not in receipt of the child element.

Note: The individual child element of Child Tax Credit will no longer be awarded for third and subsequent children or qualifying young persons in a household, born on or after 6 April 2017, unless it meets the exception criteria.

Note: If you are dealing with a claim where an exception marker has been applied to any of the children/young persons included in the claim or the customer is reporting a change relating to an exception contact the Exception Team (This content has been withheld because of exemptions in the Freedom of Information Act 2000) . (This content has been withheld because of exemptions in the Freedom of Information Act 2000) For how to check if the exception marker has been applied, use TCM1000314.

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’.