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HMRC internal manual

Tax Credits Technical Manual

From
HM Revenue & Customs
Updated
, see all updates

Calculation of awards: Step 3 - Determining whether income needs to be taken into account and applying income tapers

Comparing the taper amount to the entitlement amount

The Tax Credit (Income Thresholds and Determination of Rates) Regulations 2002, Reg 7(3), Step 6 and 11, Reg 8 Steps 6 and 7

If the taper amount is less than the amount of the entitlement being considered the taper amount is deducted from the entitlement to find the net amount due

  • The amounts of all other WTC and CTC entitlements are due in full because all of the income has been used up to reduce the award
  • The taper calculation is complete for this relevant period

If the taper amount is equal to or more than the amount of the entitlement, the entitlement will no longer be due as it has all been tapered away

  • If this is the only or the last entitlement included in the maximum tax credit award for the entitlement period, then there will be a ‘Nil’ award for the period
  • If this is not the only or the last entitlement included in the maximum tax credit award for the entitlement period, then the next entitlement in the taper order will need to be considered

See worked example (TCTM07APPX2)