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HMRC internal manual

Tax Credits Manual

Specialist areas - Complex: Prisoners - change of circumstances (Info)

From 6 April 2007, the Regulations were amended to remove entitlement to Working Tax Credit (WTC) from customers who are serving a custodial sentence.

This means that, from 6 April 2007, any work done by a prisoner

  • inside prison
  • outside prison on licence - for example, on day release
  • whilst held on remand awaiting trial or sentence

is not treated as qualifying remunerative work for tax credits purposes.

Customers who are in receipt of WTC immediately prior to being placed on remand will continue to be entitled to WTC for as long as they

  • remain employed or are suspended from work pending the outcome of a police investigation


  • continue to be self-employed


  • until they are sentenced.

Calculation of income

Any amount paid to a customer for work done whilst they are serving a custodial sentence or remanded in custody awaiting trial or sentence is treated as employment income.

WTC four-week run-on period

Customers who are either on remand or serving a custodial sentence are not entitled to the four-week run-on period.

Entitlement to childcare charges

A couple will still be entitled to claim childcare charges where one member of a couple is working for at least 16 hours or more weekly and the other is either on remand or serving a custodial sentence.

Entitlement to Child Tax Credit

Entitlement to Child tax Credit (CTC) is not affected by the change in the Regulations and will continue to be payable to customers who satisfy the eligibility criteria (unless a claim to CTC is made by the person who’s looking after the child or young person).

Action to take

Any change of circumstances cases regarding remand or custodial cases dealing only with joint claims and there are no children, should be dealt with by the ‘UK Complex Team’. The cases should be referred by taxpost to UK Complex Team (This content has been withheld because of exemptions in the Freedom of Information Act 2000) . All other cases should be worked by physical change of circumstance teams.