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HMRC internal manual

Tax Credits Manual

Extra information - miscellaneous information: Notional entitlement calculations examples

Note: The backdating period is 93 days up to 05-04-12 and 31 days from 06-04-12.

Example 1 
Example 2 
Example 3

Example 1

This example is where there was a partner at the date the claim was made and the partner is still living with the customer.

Katie made a claim as a single person on 6 August 2005 that was not backdated. She had been living with Nick at the date the claim was made but thought that, since he was a long distance lorry driver who was only at home two days each week, she did not need to include him on the claim.

On 1 December 2007, she phones the Tax Credits Helpline because she realises she has made a mistake. The award is then terminated. On the same day, Katie and Nick make a claim as a couple and this claim is backdated 93 days to 01-09-2007.

The amounts overpaid between 06-08-2005 and 01-12-2007 are

2005-2006 (06-08-2005 to 05-04-2006) £7,160
   
2006-2007 (06-04-2006 to 05-04-2007) £9,440
2007-2008 (06-04-2007 to 01-12-2007) £7,310

Katie was able to provide details of Nick’s income. He was not included in another claim. Had Katie and Nick made a claim as a couple at the correct time they would have received

2005-2006 (06-08-2005 to 05-04-2006) £4,985
   
2006-2007 (06-04-2006 to 05-04-2007) £5,235
2007-2008 (06-04-2007 to 31-08-2007) £3,265

Note: The period for the calculation of the notional entitlement ends on 31-08-2007. This is because the correct new claim was backdated to 01-09-2007.

Katie’s overpayments after applying notional entitlement are therefore

2005-2005 £2,175
   
2006-2007 £4,205
2007-2008 £4,045

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Example 2

This example is where the partner no longer lives with the customer and the partner’s income has not been provided.

Sally made a claim on 06-05-2005 as a single customer that was not backdated. Ian had been living with her at the date of claim but they separated on 06-12-2005. Sally did not include him on the claim she made on 06-05-2005 but, on 06-11-2007, she contacts HMRC to notify her mistake.

You terminate the claim on 06-05-2005 and, on the same day, Sally makes a new claim as a single person, which is backdated to 06-08-2007. The amounts overpaid between 06-05-2005 and 05-11-2007 are

2005-2006 (06-05-2005 to 05-04-2006) £6,676
   
2006-2007 (06-05-2006 to 05-04-2007 £5,310
2007-2008 (06-04-2007 to 05-11-2007) £4,388

Sally cannot provide details of Ian’s income, so you cannot apply notional entitlement for the period 06-05-2005 to 05-12-2005. However, you calculate that if she had made a claim as a single person on 06-12-2005 she would have been entitled to tax credits of

2005-2006 (06-12-2005 to 05-04-2006) £2,427
   
2006-2007 (06-04-2006 to 05-04-2007) £2,575
2007-2008 (06-04-2007 to 05-08-2007) £2,508

Note: The period for the calculation of the notional entitlement ends on 05-08-2007. This is because the correct new claim was backdated to 06-08-2007.

Sally’s overpayments after applying notional entitlement are

2005-2006 £4,249
   
2006-2007 £2,735
2007-2008 £1,880

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Example 3

This is where the partner no longer lives with the customer and the partner’s income has been provided.

The details are as in Example 2 but Sally can provide details of Ian’s income. Ian was not included in another claim. Had they claimed as a couple for the period 06-05-2005 to 05-12-2005 they would have received £2,604. Sally’s overpayments are now

2005-2006 £1,645
   
2006-2007 £2,735
2007-2008 £1,880