Childcare Disregard ‘v’ Child Tax Credit

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  • #19904
    Anonymous
    Guest

    Can someone please help me clarify:

    Claimant satisfys all conditions for childcare disregard but her earned income is so low that there is excess childcare costs to be disregarded from Working Tax Credit. However, even WTC is fully disregarded, there are still further childcare costs to disregard.
    Should the excess then be deducted from Child Tax Credit?
    If so, is this higherarchy correct that you should first go to earnings, then WTC, then CTC?
    All guidance seems to point to WTC only but we are implementing IBS and this seems to be using CTC after earn/WTC used up. This is causing underpayments to claimants as our old system did not use the CTC.
    👿

    #1440
    chris harvey
    Participant

    Earnings, working tax credit and child tax credit can all have qualifying child care costs deducted from them. I interpret the wording of the regs to mean that you must use earnings first and any remainder may be deducted from either the working tax credit or the child tax credit.

    #1441
    Andy Simpson
    Participant

    Chris is correct; wages definately first and then Tax Credits second. We had the same enquiry a while back after it was discovered that our system was only deducting from wages and then Working Tax Credits but not Child Tax Credits. Apparently there is no difference legally between WTC & CTC – they are just Tax credits.

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