- 3 minute read
- Last updated: 11th August 2019
The question of who gets child tax credits in a shared custody arrangement can be complicated since only one person can claim child tax credit for any one child.
Both parents may feel they would benefit from receiving child tax credit and on the basis of a shared custody arrangement, both may feel they should be entitled.
‘Custody’ is now more commonly referred to as residency, indicating where the child’s main residence is following a parental break up. To be eligible for child tax credit, however, the test is whether you are ‘responsible’ for the child you want to claim for.
This article covers:
- What are child tax credits?
- Who gets child tax credits in shared custody?
- How to claim child tax credits
- Documents you need to support your claim
- How you will be paid
- What other support can I claim?
Child tax credit was a tax-free amount paid to help with the costs of bringing up a child. Child tax credit has now been replaced by Universal Credit.
New claims for child tax credit can only be made in exceptional circumstances, for example if you are receiving the severe disability premium.
Under the child tax credit scheme, if you are responsible for a child aged 16 or under, you may be able to claim credit until the end of the August after their 16th birthday. You may also be able to claim if your child is under the age of 20 but still in qualifying full-time education or training.
Under Universal Credit, people on low incomes or who are unemployed can apply for help with their living costs if they are aged between 18 (or 16 or 17 in limited circumstances) and under state pension age, they live in the UK and have less than £16,000 in savings.
The number of children you are claiming for will affect the amount you will be eligible for.
If you live with a partner – even if they are not eligible for Universal Credit – you will have to give details of their income and any savings they have when you make your claim.
Universal Credit and shared custody is dealt with under Reg. 3(1), Rule 3 of the Child Tax Credit Regulations 2002. You must have responsibility for the child you want to claim for. This means you have legal custody and the child’s day-to-day welfare is your responsibility.
The government has stipulated a ‘no splitting’ approach to tax credits in shared custody arrangements. This means only one person can claim for each child, and both parents cannot claim for the same children.
It can become difficult to determine who can or should claim the child tax credit in cases of shared custody, where both parents have legal custody of the child.
Parents are encouraged to try and resolve the issue by coming to a private agreement. This can allow for greater flexibility to suit the specific circumstances and residency arrangements.
On this basis, you could for example agree to split the credits by alternating who claims each year, since you cannot split claims mid-year or alternate the monthly payments.
If different custody arrangements are in place for different children, it may suit for one parent to claim for the child(ren) they have for the majority of the time, and for the other parent to claim for the child(ren) they are mainly responsible for.
If parents are not able to agree an approach between themselves, they can make separate applications and HMRC will make a decision based on the information provided.
In cases where more than one claim is made for the same child, it is the person deemed to have ‘main responsibility’ who is normally eligible to claim child tax credit for that child.
When assessing the claims, HMRC will consider a range of factors, such as:
- The ‘normally living with’ test. Usually the parent who has the child for more than 6 months of the year would be considered the main carer and therefore eligible to claim the credits.
- How many nights the child spends in each home. It will usually be decided that the parent who has the child for the greater number of nights will receive the child tax credit.
- Who is responsible for the child’s day to day living costs, including meals, pocket money.
- Which address the child registered at for school, doctors etc.
This list is by no means exhaustive and the Tax Credit Office may use other considerations to determine which parent is eligible to claim the child tax credit.
If one parent has already applied and been granted the credit, the other parent can still submit their application for HMRC to assess which parent would be eligible.
If you are making a new claim for child tax credits, you should call HMRC.
If you are eligible for Universal Credit, the process for making a claim will depend on your circumstances.
If you and your ex partner have reached a decision on who will receive the Credit after you have separated, it may not be necessary to make a new claim if you are already receiving Universal Credit for your child(ren) in line with the agreement with your former partner. You will only need to notify the Tax Credit Office of a change in circumstances if you are already claiming Credit. This can be done either over the phone or online.
If you claimed Universal Credit as a couple with your former partner, you will need to re-apply individually. When making your claim, you will need to ensure any ‘surplus’ earnings are added to your individual earnings in the correct way. Surplus earnings are what you earn over the Universal Credit threshold, which is more than £2,500 a month over the amount where your payment stopped.
Where surplus earnings apply, the amount has to be split equally between the two former partners and applied separately to their individual income figures when making their individual claims.
If you have not been claiming Universal Credit prior to separating, you will need to make a new claim online by completing the application form and verifying your ID.
In some cases, applicants are asked to attend an interview with a ‘work coach’ as part of their application.
If you cannot agree who should claim, you can both submit a new claim and the Tax Credit Office will determine who will be awarded the credit.
Processing time for new claims can be up to 5 weeks. New claims will only be backdated up to 31 days prior to the receipt of your claim form, so it is important to get the form in as quickly as possible.
You should call the Universal Credit helpline if you have a specific question about your application: 0800 328 5644.
If you disagree with HMRC’s decision, you may be able to make a challenge under the process of ‘mandatory reconsideration’. The decision letter will tell you if this option is open to you. Please note you will only have one month from the date of the decision to appeal.
The Universal Credit application is online. You will need to provide specific documentation and information to confirm your identity and your personal and financial circumstances.
This will include:
- Income details and evidence eg wage slips
- Disclose all savings, investments, shares, rental properties owned etc
- Bank account details
- Your email address
- Information about your housing situation eg rent amount per week
- How much you pay in childcare costs
You also have to prove your identity, using either your passport, driving licence or debit or credit card.
The parent who is awarded the Credit will be paid directly into their bank account monthly. The payments will be made from the date of the claim until the 5th April which is the end of the tax year.
You will not need to apply again the following year, you will just need to check your information, give any changes in circumstance and renew your claim. This can be done either online or over the phone with the Tax Credit Office.
When you separate from your partner, it can be difficult to manage on a single income. Other forms of financial support may be available to you if you are eligible. The government’s benefits calculator can help you identify which, if any, benefits or financial support you may be entitled to.
The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.