Client was on Income Support until June 08 when she got a job and claimed WTC. IS was all paid for housing costs (apart from the standard 10p per week) as the client has an occupational pension, long term IB and her partner receives carer's allowance.

My first assumption was that because she was on IS for the whole of the 07-08 tax year, she should get maximum WTC for the remainder of 08-09.

However, the TCO have based her award on her 07-08 taxable income, which is around £12,000 even though she was on IS. The CPAG handbook implies that this is correct but I just want to make sure I'm reading it right. The relevant bit of the Tax Credit Act isn't really helping me.

Any pointers gratefully received.

Sally - I think that receipt of a qualifying benefit (whether it be IS, ibJSA or PC), has to be at the same time as the period for which tax credit is awarded. If she is not on IS NOW, then HMRC look at her previous tax year's income, disregarding her IS but taking into account other, taxable income.

I think the Tax Credits Act s7(1) is the key, read in conjunction with the rest of that section, and providing that the assessment of relevant income is not required 'for so long as....the person is entitled to any social security benefit prescribed for the purposes of this subsection'.

Ie, now your client is no longer on IS, her tax credit is dependent on her 'relevant income' - in this case, 07/08 income, assuming income for 08/09 does not exceed it by more than £25,000.

Rachel