I queried this with the DWP last year. See below for my email and the DWP’s response:
Question:
Regulation 10 of the Tax Credits (Payments by the Board) Regulations 2002 provides for the one-off payment of tax credit for the whole period of the award where the entitlement is less than £2.00 per week.
What do we do from April 2005 when annual CTC or WTC entitlement is paid in one lump sum because weekly entitlement is less than £2.00? (In the case in question WTC of £64.02 will be paid on 26/4/05 as a lump sum as entitlement is < £2.00 per week).
Because we base weekly income on actual instalment values now rather than annual entitlement am I right in thinking that we would treat the payment as a ‘one off’ and so disregard as income altogether? (This could be to the detriment of the claimant in the extremely rare cases where WTC is paid this way and the claimant would qualify for the disability premium or the additional earnings disregard if we calculated WTC on a weekly basis and used the appropriate income code in our system).
DWP Answer:
There is provision in regulations to treat daily, weekly and monthly paid tax credits as income but there is no provision to treat annually paid amounts. Therefore, this would be treated as capital provided it is less than £2 a week. This should not be detrimental to the claimant, as they do not have to be in receipt of WTC to qualify for the additional earnings disregard or the disability premium.
Lucy Da Silva
Housing Support Division
5th Floor, Adelphi.
.
