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Children's tax credit

In the replies to the Readers' Forum query 'Double credit?' in Taxation, 2 May 2002 at pages 139 and 140, both respondents indicated that only one children's tax credit would be given to the family concerned.

The facts were that A and B live together and each has resident at the home a child by a previous partner. So in this particular case, there are qualifying children resident with the adults, A and B, but neither of the children are qualifying children in respect of both A and B. This means that the children are not 'relevant children' and so paragraphs 1 to 5 of Schedule 13B to the Taxes Act 1988, which do restrict a couple to one claim, do not apply.

One has to look to paragraph 6 of Schedule 13B. Subparagraph 6(b) does indicate that the sum of the proportions shall not exceed 100 per cent, but this does not refer to the couple with whom the children are resident. It refers to the birth parents of the qualifying child.

Therefore, in this case, the proportion allocated to A may be agreed to be 100 per cent and the birth mother of A's child would have to agree to a proportion of 0 per cent. Likewise the proportion allocated to B could be as much as 100 per cent and the proportion allocated to the birth father of B's child could be as little as 0 per cent.

This analysis is supported by the Revenue's Independent Taxation Manual at paragraphs IN1432 and IN1433. This makes it quite clear that the full children's tax credit can be claimed by each partner, if the agreed proportions are such that each partner has been allocated 100 per cent.

In conclusion, if the other parents of the children agree that their proportion of the children's tax credit will be 0 per cent, both A and B can claim the full credit.

Chris Hodgson,

Tait Walker,

Newcastle upon Tyne.

Issue: 3859 / Categories: