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Ask4 Guide to Tax Credits

The information below is guidance specifically for students and should be considered in conjunction with general information about filling in the tax credits form from the booklet "How to complete your tax credits claim form"

Pages 3 & 4 Box 2.5: Disabled Children

There is an error on the form here regarding information needed about your children. If your child receives Disability Living Allowance Mobility Component (either lower or higher rate) you should still put an 'X' in the second box i.e. the box that states "Disability Living Allowance (Lowest or Middle Care Component) is paid for this child"

Pages 8 & 9 Part 5: Income Details

The form asks for details of your income and your partner's income for the year 6 April 2001 to 5 April 2002. If your current income is less than this the Inland Revenue advice is to complete the form as requested i.e. use the out of date figures but then contact them to inform them of a 'change in circumstances'

Page 9 'OTHER INCOME'

Student support income should go at the bottom of page 9 under 'OTHER INCOME'. But a lot of your student support payments are ignored and shouldn't be included on the claim form. The following are disregarded: student loan, lone parents' childcare grant, school meals grant, SAAS travel expenses, mature students bursary fund payments, hardship fund payments, and bursaries. You should only include any dependants' grant and the lone parents' grant. Add these elements up and put the total at the bottom of page 9 in box 5.6. If you have any of the 'other income' listed on page 32 - 34 of the 'How to complete your tax credits claim form' booklet this should also be included in the total at the bottom of page 9 in box 5.6. Despite what the form says the £300 disregard does not apply to Student income so you shouldn't deduct £300. But, if your other income consists of Pension income, Investment income or Property income you can deduct £300 from this income.

Approximate Tax Credit Entitlements

Example 1. Lone parent with one child

SAAS funded Lone parent with one child who receives Housing Benefit, Lone Parent Grant, Lone Parents Childcare Grant, Dependants Grant, Hardship Fund Payments, SAAS Travel Expenses. No other income. Housing Benefit, Lone Parents Childcare Grant, Hardship Fund Payments, SAAS Travel Expenses are ignored as income. Only Lone Parent Grant and Dependants Grant should be included on the application form as 'OTHER INCOME' on page 9 of the application form. Entitled to £1990 per year CHILD TAX CREDIT paid at £38.27 per week or £153.08 every 4-weeks Please note: payments of Tax Credit will reduce the amount of Housing Benefit paid. You lose 65p HB for every £1 of extra income so in this case HB would reduce by £38.27 X 0.65 = £24.88 per week.

Example 2. Lone parent with two children

SAAS funded Lone parent with two children who receives Housing Benefit, Lone Parent Grant, Lone Parents Childcare Grant, Dependants Grant, Hardship Fund Payments, SAAS Travel Expenses. No other income. Only Lone Parent Grant and Dependants Grant should be included on the application form as 'OTHER INCOME' on page 9 of the application form. Entitled to £3435 per year CHILD TAX CREDIT paid at £66.06 per wk or £264.23 every 4-weeks. Any HB paid would be reduced by £42.94 per week (£66.06 X 0.65).

Example 3. Couple with 2 children

One is a student (who gets full student loan) the other works 40 hours per week and earns £280 per week (£14,560 per year) before tax. No other income. Entitled to £3565 per year Tax Credits (equivalent to £68.56 per week) made up of £130 per year WORKING TAX CREDIT and £3435 per year CHILD TAX CREDIT. Any HB paid would be reduced by £44.56 per week (£68.56 X 0.65).

Example 4. Couple with 1 child
One is a student (who gets the non-means tested part of the student loan) the other works 40 hours per week and earns £961 per week! (£50,000 per year!) before tax. No other income. Entitled to £545 per year CHILD TAX CREDIT paid at £10.48 per week or £41.92 every 4-weeks.