Child Tax Credit, mixed-age couple, and Pension Credit.

Got a mixed-age couple (MAC) who are currently claiming Pension Credit (PC) and Child Tax Credit (CTC).

We’ve been asked whether they can withdraw the CTC award and seek to have the child elements of PC put into place instead.

I’ve checked reg.6 of the SPC Regs 2002 and the decision makers guidance from para.78549 and to me it looks as if they would need to allow the current year’s CTC award to run through until the end of the financial year and then not make a reclaim for 2020/21.

This is due to the provisions in reg.6.(15) which cover a variety of scenarios concerned with finalising CTC awards.

Would welcome the thoughts of anyone else on this as for obvious reasons, we want to tread carefully here. They’re also looking at making a Carer’s Allowance claim to maximise income as younger wife looks after older disabled partner but this leaves them with minimal PC entitlement so boosting this through child elements would be helpful reassurance.

Thanks for any views on this.

I don’t think this is correct. They could theoretically end it now and get the extra amount of SPC.

Reg 6(15) is only relevant for cases where a claimant does not do their renewal, and provisional payments are stopped. In those circumstances, tax credit legislation allows them to be restarted if you do your renewal within 30 days, or exceptionally, by 31/01.

I would however be wary of ending tax credits. If there is a possibility of either of them working and claiming WTC, it could be worthwhile to keep the CTC.

What is in it for them to move it over to SPC? Do they have a third child post April 2017?

Thanks Charles, they’re already claiming PC.

It’s simply that with a CA award in place, their PC entitlement goes down to ~£8p/w and he has occupational pension so adviser concerned that small rise could see them lose PC entirely, whereas having child elements included (2 children), then that gives bigger buffer.

Don’t think wife will ever work as she is main carer for disabled husband and there’s large age gap.

If they simply ask HMRC to close the CTC award down now, doesn’t the award still exist until it is finalised? The guidance at 78550 implies the CTC award maintains unless change of circumstances brings it to an end or they migrate to UC. We hardly ever have to deal with tax credits and I don;t have my resources to hand as having to work at home.

What I want to avoid is them closing the CTC award down, Pension Service refuse to include child elements and no way back to CTC which only leaves UC, which they clearly want to avoid.

Would it be so devastating to lose PC if it was due to high pension income (which they presumably won’t ever lose)? I suppose if they lose the PC and then get migrated to UC, they will lose out on the annual uprating for the child elements, so perhaps better to keep the PC as you say.

If they close their tax credit claim now, no award will be made for the 2020-21 tax year, and they will be able to add the children to the PC claim on 06/04/2020*. Another option would be to claim UC, and then immediately withdraw the claim before a decision is made on it, in which case they could add the children to the PC claim straightaway.

* You could possibly argue that Reg 6(12)(b) and (13) will still stop this even though they have withdrawn the claim, but I’m pretty sure that interpretation is incorrect, and it’s certainly not the intention.

Charles there is also the possibility they could lose passport entitlement such as CTR / HB schemes through having to claim UC and then there are the differing capital rules…
Granted there are no indications here that this is the case, but MACs can lose out considerably so it is always wise to tread warily in such situations if the PC award is at risk.

Yes, that is true, I hadn’t thought of that. Thanks.

Charles - 17 March 2020 03:18 PM

Would it be so devastating to lose PC if it was due to high pension income (which they presumably won’t ever lose)? I suppose if they lose the PC and then get migrated to UC, they will lose out on the annual uprating for the child elements, so perhaps better to keep the PC as you say.

If they close their tax credit claim now, no award will be made for the 2020-21 tax year, and they will be able to add the children to the PC claim on 06/04/2020*. Another option would be to claim UC, and then immediately withdraw the claim before a decision is made on it, in which case they could add the children to the PC claim straightaway.

* You could possibly argue that Reg 6(12)(b) and (13) will still stop this even though they have withdrawn the claim, but I’m pretty sure that interpretation is incorrect, and it’s certainly not the intention.

Actually, I’ve checked the adviser calculation and they definitely lose PC if they claim CA currently, as the residual entitlement is actually Savings Credit.

The parts of the reg that you highlight are what worry me, when taken together with the guidance. I’m not sure they would be wanting to escalate this to appeal if they did get knocked back.

Might advise to hold fire for now and see if I can get any clarity from Pension Service. Thanks for your response.

I would just add that if they withdraw from tax credits after the start of the new tax year (but before an award is made on the renewal), they will lose CTC back from the start of the tax year. PC normally only backdate one month, so they could be left with a gap if they’re not careful.