Overview and Purpose: The purpose of CTC and WTC together
The system of support provided by CTC and WTC is designed to deliver:
- A secure stream of income for families with children which does not depend on the employment status of the parents, creating a stable income bridge when families move into work;
- Help to tackle poor work incentives and persistent poverty among working people;
- A system in which all support for children is paid direct to the main carer - usually the mother - in line with Child Benefit;
- A common framework for assessment, so that all families are part of the same system;
- An annual system, under which awards run in line with the tax year;
- A modern income test, which brings the definition of income for tax credits more closely into line with tax; and
- A responsive system, in which a family’s tax credit award can be adjusted to reflect changes in a family’s income and circumstances.
The system will respond to falls in income in the current tax year, compared with last tax year in excess of £2,500 and responds to rises in income of more than £5,000, so that recipients do not see their tax credit for the current tax year reduce or increase as soon as their income rises or falls, respectively.