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HMRC internal manual

Tax Credits Manual

From
HM Revenue & Customs
Updated
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Miscellaneous (A to B): Award calculation stage 2 - Calculating maximum entitlement due for each entitlement period (Info)

To determine the maximum amount of each tax credit entitlement due for each entitlement period

  • determine the annual rates (for the year of the award) for each element (other than the childcare element) the customers are eligible for in the entitlement period. Follow the guidance in TCM0132420 
  • divide the annual element rate by the number of days in the award year, round the result up to the nearest penny and then multiply that amount by the number of days in the actual entitlement period.

This will be done for each entitlement period within the award period.

Note: Rounding up the daily rate means that where an element is due for a full year, the maximum amount calculated will be more than the starting ‘annual’ rate.

The maximum value of the childcare element for each entitlement period is calculated by

  • multiplying the weekly rate of the customer’s childcare costs by 52 to give an annual rate. Converting this to an amount for each entitlement period by dividing by the number of days in the award year and multiplying by the number of days in the entitlement period
  • dividing the weekly limits for childcare costs by seven, rounding up to the nearest penny and then multiplying by the number of days in the entitlement period
  • comparing the costs and limit amounts found for the entitlement period. Where the amount of child care costs for the entitlement period

    • does not exceed the limit amount, multiplying the costs by the costs percentage and rounding up the result to the nearest penny. For the current costs percentage, follow the guidance in TCM0132420 
    • exceeds the limit amount, multiplying the limit amount by the costs percentage and rounding up the result to the nearest penny.

This will be done for each entitlement period within the award period.

The element amounts of each entitlement are then totalled to give the maximum value of each entitlement for each entitlement period.