Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Tax Credits Manual

From
HM Revenue & Customs
Updated
, see all updates

Miscellaneous (A to B): Award calculation stage 1 - Establishing award periods and entitlement periods (Info)

The award period for an initial award starts on the effective date of the claim and runs to the end of the tax year or the date that all tax credit eligibility ceases (if this occurs earlier).

The award period for a revised or finalised award will not change from that of the previous calculation unless

  • the award has been terminated (in which case, there is no longer an award for the period)

or

  • the new circumstances

    • create eligibility at an earlier date and the claim should therefore be backdated to the earlier date
    • or
    • mean that eligibility to all tax credits has ceased before the end of the tax year (or earlier or later than the previous award end date) and therefore the award should cease.

Renewal awards will be made for a full tax year (or until the date all tax credit eligibility ceases if this occurs during the year).

Within the award period, the customer may have an entitlement period that requires a separate calculation because

  • there is a change in tax credit eligibility during the award period

or

  • income only needs to be taken into account for part of the award period.

The calculation will divide the award period into the relevant entitlement periods and calculate the rate of award due separately for each entitlement period. This will enable the rate of tax credit paid to the customer to change as the customer’s circumstances change.

Changes in tax credits eligibility

For the majority of initial award calculations, the tax credit eligibility will remain unchanged throughout the award period. However, the customer may be eligible for a tax credit at the start of the award which ceases before the end of the award period.

For revised award calculations, a change in tax credit eligibility can occur because

  • there has been a change in the customer’s circumstances part way through an award period

or, as with initial awards

  • eligibility for one or more of the tax credit elements ends before the end of the award period

Note: Follow the guidance in TCM0322640.

Example 

A claim, with an effective date of 02/05/2003 satisfies the eligibility rules for both Working Tax Credit (WTC) and Child Tax Credit (CTC). It includes a child whose 16th birthday is on 20/09/2002.

The award period is from 02/05/2003 to 05/04/2004.

For an initial award, the eligibility to CTC child element will end on 31 August on or following the child’s 16th birthday. Therefore, there will be a change in eligibility on 01/09/2003.

Two entitlement periods will be considered in the award calculation. The first entitlement period will be from 02/05/2003 to 31/08/2003. The second entitlement period will be from 01/09/2003 to 05/04/2004.

Income only taken into account for part of the award period

The decision about whether income should be taken into account is based on receipt of one or more social security benefits. Follow the guidance in TCM0132200. The need to take into account income for part of the award period will therefore never occur in initial award calculations.

It will occur for revised award calculations if receipt of one or more of these benefits either starts or ends part way through the award period. A new entitlement period will need to be considered to allow the maximum entitlement to be calculated for the award period when the income is to be ignored.