Glossary - terms explained

Please click any word or phrase below to view its meaning.
Adult Dependant's Grant
Approving Local Authority
Approved Childcare Provider
Approved Training Course
Attendance Allowance
Before Deductions
Bereavement Allowance
Careers service, Connexions or similar
Carer's Allowance
Child/Children
Child Benefit
Childcare Costs
Child – Disabled
Child Tax Credit
Children's Income
Council Tax Benefit
Couple
Department for Work and Pensions
Disability Living Allowance
Disabled
Disadvantage Test
Earnings
Employment and Support Allowance
Employment Status
Estates
Foreign Income
Full-time Education
Household
Household Income
Housing Benefit
Incapacitated
Incapacity Benefit
Income
Income-Based Jobseeker's Allowance
Income Support
Jobseeker's Allowance
Maintenance
Miscellaneous Taxable Income
Notional Income
Occupational/Personal Pensions
Other Income
Paid Jobs
Partner
Payment In Kind
Pension Contributions
Pension Credit
Personal Independence Payment
Property
Qualifying Benefits Test
Regular Hours
Savings, Investments and Dividends
Self-Employed
Self-Employed Profits
Severe Disablement Allowance
Social Security Benefits
State Pension
Statutory Maternity Pay
Statutory Sick Pay
Strike Pay
Subject to Immigration Control
Tips and Gratuities
Trusts and Settlements
UK
Working Tax Credit
Young Person

Adult Dependant's Grant

The Adult Dependant's Grant is paid to students with a spouse or a dependant adult. You do not need to tell us about the Parent's Learning Allowance.

For tax credits purposes you must tell us the full amount of Adult Dependant's Grant you received.

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Approving Local Authority

You can only claim for the costs of childcare arrangements if the childcare provider is properly registered or approved. You must obtain the approval or registration details from your childcare provider to qualify for the childcare element of Working Tax Credit (WTC). Ask your childcare provider for these details if you do not know them.

You will not be entitled to the childcare element of WTC if your childcare is provided by

• a relative of your child, in the child's own home. You will not be eligible even if the relative is registered or approved, or
• a childcare provider approved under a Home Child Care Provider scheme who is providing childcare away from your child's home and who is only caring for a child or children they are related to.
A relative of your child could be a parent, grandparent, aunt, uncle, brother or sister or step-parent. A relative is not necessary a 'blood' relative. If you have a partner, it also includes their relatives.

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Approved Childcare Provider

This is the person or organisation you pay to look after your child or children.

In England

1) If you use a childminder, playscheme, childcare club or nursery they must be registered with Ofsted to count for tax credits.

2) If a care worker or nurse looks after your child, it counts for tax credits if they are from an agency registered for providing care in the home - for example a domiciliary care worker.

3) If you use childcare provided by a school, to count for tax credits it must be:

• provided under the direction of school’s governing body or the person responsible for managing the school

• on school premises, or on other premises that may be inspected as part of a school inspection - either by Ofsted or an equivalent inspection body (for example the Independent Schools Inspectorate, Bridge Schools Inspectorate or the Schools Inspection Service).

An example of 'other premises' could be where a school uses a village hall for their out of school hours care.

If your child is between 5 years and 15 years old (16 they're disabled) the childcare must also be provided out of school hours.

In Wales

To count for tax credits your childcare provider must be one of the following:

• registered with the Care and Social Services Inspectorate Wales (CSSIW)

• a school that provides childcare outside of school hours and on school premises

• a local authority that provides childcare outside of school hours

• a care worker or nurse from an agency registered for providing care in the home, for example, a domiciliary care worker

• someone approved by the Childcare at Home Approval Scheme, providing childcare in your child’s home - or if several children are being looked after, in one of the children’s homes.

If a foster carer cares for your child

It counts for tax credits if you use a foster carer for your childcare in Wales. If your child is:

• under 8, the foster carer must be registered with the Care and Social Services Inspectorate Wales (CSSIW)

• under 16 and the care is in your child’s home, the foster carer must be approved by the Childcare at Home Approval Scheme

You can't claim for childcare costs for caring for your own foster child.

In Scotland

To count for tax credits your childcare provider must be one of the following:

• registered with Social Care and Social Work Improvement Scotland (SCSWIS)

• a childcare club that is registered with SCSWIS to provide childcare outside of school hours

• a person from a registered childcare agency, sitter service or nanny agency providing childcare in your child’s home

If a foster carer or 'kinship' carer cares for your child

It counts for tax credits if you use an approved foster carer or a 'kinship' carer for your childcare in Scotland. A kinship carer is like a foster carer, but they know the child they're looking after because they're related, or are a family friend.

If you use a foster or kinship carer for your childcare, they must be registered with Social Care and Social Work Improvement Scotland (SCSWIS) as a childminder or day-care provider.

You can’t claim for childcare costs for caring for:

• your own foster child

• a child you're looking after yourself as part of a kinship care arrangement.

In Northern Ireland

To count for tax credits your childcare provider must be one of the following:

• registered with a Health and Social Services Trust

• a school that provides out of school hours childcare on the school premises

• an Education and Library Board that provides out of school hours childcare

• a person approved by the Home Childcare Approval Scheme, providing childcare in the child’s home

If a foster carer cares for your child

It counts for tax credits if you use a foster carer for your childcare in Northern Ireland. If your child is:

• under 12, the foster carer must be registered with a Health and Social Services Trust

• under 16 and the care is in your child’s home, the foster carer must be approved under the Approval of Home Childcare Approval Scheme

You can’t claim for childcare costs for caring for your own foster child.

If your child is looked after by your partner or a relative

It doesn’t count for tax credits if your childcare is provided by your partner.

It doesn't usually count for tax credits if your childcare is provided by a relative, even if they're registered or approved.

A relative could be your child's:

• parent
• grandparent
• aunt or uncle
• brother or sister
• step-parent.

A relative is not necessarily a 'blood' relative. If you have a partner, it also includes their relatives.

You can only claim tax credits for childcare provided by a relative if the relative is either:

• a registered childminder who cares for your child outside of your child's own home.

• a childcare provider, approved under a Home Child Care Providers Scheme in Wales or Northern Ireland, who cares for your child outside of your child's own home - but they must also care for at least one other child who's not related to them.

If you’re a Crown servant working abroad

If you’re a Crown servant - for example a civil servant or a member of the armed forces - you could be posted overseas. If your child has gone with you, you can usually claim help with your childcare costs. But, your childcare provider needs to be approved by a Ministry of Defence accreditation scheme abroad.

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Approved Training Course

An approved training course is one of the following and is not provided through a contract of employment.

• England - Foundation Learning Programmes (previously known as 'Entry to Employment'), Access to Apprenticeships or unwaged Programme Led Apprenticeships

• Scotland - Get Ready for Work (including West Lothian Council’s Skills Training Programme) or Skillseekers

• Wales - Skillbuild/Skillbuild+ (if started before 1 August 2011), Foundation Apprenticeships or Traineeships

• Northern Ireland - Jobskills or Training for Success, including Programme Led Apprenticeships.

If your child is 19 years old, they must have enrolled, been accepted for or started approved training before they turned 19.

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Attendance Allowance

This is a social security benefit paid by the Department for Work and Pensions (DWP).

Attendance Allowance is a tax-free benefit for people aged 65 or over who need help with personal care because they are physically or mentally disabled.

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Before Deductions

This is the income figure shown as your gross pay on your P60 Certificate.

We need to know the total amount of income from all your paid employments before taking off

• Income Tax
• National Insurance contributions
• other deductions, in particular any contributions from your earnings to buy shares in your employer's company under a Share Incentive Plan (SIP).

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Bereavement Allowance

This is a social security benefit paid by the Department for Work and Pensions (DWP).

If you are widowed you may be able to claim Bereavement Allowance, a taxable weekly benefit paid to you from the date of death of your husband, wife or civil partner. Bereavement allowance is included as income for tax credits purposes.

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Careers service, Connexions or similar

Careers service, Connexions or similar services include the following:

• in England - the local careers service, Connexions or local authority support service

• in Scotland or Wales – the local careers service

• in Northern Ireland - the careers service of the Department for Employment and Learning or an Education and Library Board

• the Ministry of Defence - if your child has applied for and is waiting to join the Armed Forces

• a similar organisation to others in this list in any European Economic Area country

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Carer's Allowance

This is a social security benefit paid by the Department for Work and Pensions (DWP).

Carer's Allowance is a benefit to help people who look after a disabled person. You do not have to be related to, or live with the person you care for. Carers Allowance, plus any child dependency increases is included as income for tax credits purposes.

Carer's Allowance used to be called as 'Invalid Care Allowance'.

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Child/Children

You can claim Child Tax Credit for a child or a young person who normally lives with you. A child or a young person can only be included in one household at any one time. If you have shared responsibility for a child and are unsure who should claim then please contact the Tax Credit Helpline on Tel 0345 300 3900 or Textphone 0345 300 3909.

For tax credit purposes a child is a person aged under 16 at which point they will become a young person.

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Child Benefit

Child Benefit is a regular payment made to anyone bringing up a child or a young person. It is paid for each child that qualifies and is not affected by income or savings.

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Childcare Costs

This is the amount of money you pay to the registered or approved childcare provider for them to look after your child or children.

As part of Working Tax Credit (WTC) you may qualify for help towards the costs of childcare. If you qualify, the amount of help you receive will depend on your income.

You can get up to 70p for every £1.00 you pay out in childcare costs.

This is up to a limit of £175.00 in costs per week for one child and £300.00 for two or more children. Any costs that you pay in excess of these amounts are not used in the calculation.

This means the most you can receive for the childcare element is £122.50 (£175 at 70p in the £1) if you have one child or £210.00 (£300 at 70p in the £1) if you have two or more children.

You can claim for any child up to the Saturday following 1 September after their 15th birthday.

You can claim up to the Saturday following 1 September after a child's 16th birthday if the child is

• registered blind, or
• has been taken off the blind register within the last 28 weeks before you complete the form, or
• you receive Disability Living Allowance for that child.

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Child - Disabled

A child is classed as disabled if for Child Tax Credit purposes if

• Disability Living Allowance (DLA) is payable for that child (or ceased to be paid because the child was in hospital), or
• the child is registered blind or came off the blind register in the 28 weeks before you claimed tax credits.

If either of these applies you may get the disability element of Child Tax Credit. If the Highest Rate Care Component of DLA is paid for your child, you may also get the severe disability element of Child Tax Credit.

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Child Tax Credit

Child Tax Credit (CTC) is for families who are responsible for at least one child or qualifying young person. You should claim if you have a child or qualifying young person who usually lives with you. You do not have to be working to claim CTC.

CTC is made up of the following

• Family element, the basic element for families responsible for one or more children. There is only one family element for each family, regardless of how many children usually live with you.
• Child element, one for each child you are responsible for
• Disability element, one for each child you are responsible for
- if you are receiving Disability Living Allowance for the child, or
- the child is registered blind or came off the blind register in the 28 weeks before you claimed tax credits.
• Severe disability element, one for each severely disabled child you have.

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Children's Income

This is income that your child or children receive, for example, from a part-time job. For the purpose of tax credits you do not need to tell us about this income unless it is taxable in your name or your partner's name.

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Council Tax Benefit

This is a payment made by a local authority, usually in the form of a discount to help the recipient pay the cost of their council tax.

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Couple

A couple means

• a man and a woman who are married to each other or living together as if they are married, or
• two people of the same sex who are in a civil partnership, or living together as if they are in a civil partnership.

If you have separated from your partner, make an individual claim. If you are married or in a civil partnership you must be separated under a court order or in circumstances that are likely to be permanent to make an individual claim. You are not separated if one of you is living away from home temporarily and it is your intention to continue as a couple in the future. For example, one of you may be working and living away from home, or in hospital.

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Department for Work and Pensions

Department for Work and Pensions (DWP) are responsible for paying social security benefits.

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Disability Living Allowance

This is a social security benefit paid by the Department for Work and Pensions (DWP).

You may be able to get Disability Living Allowance if you are aged under 65 and you have needed help with personal care or had walking difficulties because of a physical or mental disability for three months and you are likely to need this help or have these difficulties for at least another six months.

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Disabled

An adult is classed as disabled for Working Tax Credit purposes if

• they usually work for 16 hours or more a week
• they have an illness or disability that puts them at a disadvantage in getting a job (see disadvantage test), and
• they meet the qualifying benefit test

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Disadvantage Test

To meet this test you must meet one of the following criteria.

1. When standing you cannot keep your balance unless you continually hold onto something.
2. Using any crutches, walking frame, walking stick, prosthesis or similar walking aid which you normally use, you cannot walk a continuous distance of 100 metres along level ground without stopping or without suffering severe pain.
3. You can use neither of your hands behind your back as in the process of putting on a jacket or of tucking a shirt into trousers.
4. You can extend neither of your arms in front of you so as to shake hands with another person without difficulty.
5. You can put neither of your hands up to your head without difficulty so as to put on a hat.
6. Due to lack of manual dexterity you cannot, with one hand, pick up a coin which is not more than 2.5 centimetres in diameter.
7. You are not able to use your hands or arms to pick up a full jug of 1 litre capacity and pour from it into a cup, without difficulty.
8. You can turn neither of your hands sideways through 180 degrees.
9. You -
(a) are registered as blind or registered as partially sighted in a register compiled by a local authority in England, or
(b) have been certified, in Scotland, as blind or as partially sighted and, in consequence, registered as blind or partially sighted in a register maintained by or on behalf of a regional or island council, or
(c) have been certified as blind or partially sighted and, in consequence, are registered as blind or partially sighted in a register maintained by or on behalf of a Health and Social Services Board or Trust in Northern Ireland
10. You cannot see to read 16 point print at a distance greater than 20 centimetres, if appropriate, wearing the glasses you normally use.
11. You cannot hear a telephone ring when you are in the same room as the telephone, if appropriate, using a hearing aid you normally use.
12. In a quiet room you have difficulty in hearing what someone talking in a loud voice at a distance of 2 metres says, if appropriate, using a hearing aid you normally use.
13. People who know you well have difficulty in understanding what you say.
14. When a person you know well speaks to you, you have difficulty in understanding what that person says.
15. At least once a year during waking hours you are in a coma or have a fit in which you lose consciousness.
16. You have a mental illness for which you receive regular treatment under the supervision of a medically qualified person.
17. Due to mental disability you are often confused or forgetful.
18. You cannot do the simplest addition and subtraction.
19. Due to mental disability you strike people or damage property or are unable to form normal social relationships.
20. You cannot normally sustain an 8 hour working day or a 5 day working week due to a medical condition or intermittent or continuous severe pain.
21. For initial claims only, as a result of an illness or accident you are undergoing a period of habilitation or rehabilitation. This cannot apply if you have been receiving the disability element of Working Tax Credit in the past 2 years.

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Earnings

This is income received for work done as an employee as well as the value of some benefits provided by your employer.

For the purpose of tax credits, your actual income is your income for a tax year or your joint income if you are part of a couple. Even if you were only together for part of a year, we need details of both your individual incomes for the whole year.

You need to tell us the gross amount of income before income tax and National Insurance contributions have been taken off.

Include:

• Statutory Sick Pay. This counts as income for tax credit purposes. (It will already be in the pay figure of your P60 or P45)
• any tips or gratuities you received
• the taxable part of any payments you received in connection with the termination of an employment, or if the terms of your employment were changed (such payments for example redundancy payments, are taxed if they exceed £30,000),
• taxable gains from security options (such as company shares, bonds, Government gilts etc) acquired by reason of your employment
• strike pay which you received if you were involved in industrial action (this counts as income for tax credits even though such payments are not taxable as earnings).

You will need to deduct

• any expenses which you met from your earnings and which arose wholly, exclusively and necessarily in the course of your work. If you paid such expenses and were not reimbursed by your employer, deduct the amount of these from your gross pay. If your employer reimbursed you, do not include the reimbursed amount received in your claim
• certain payments from your earnings which are deductible for income tax purposes, such as fees and subscriptions to professional bodies and learned societies, employee liabilities and indemnity insurance premiums, and agency fees paid by entertainers.
• Flat-rate expenses agreed by HM Revenue & Customs (HMRC), to maintain or renew tools or special clothes (such as uniform) that are necessary to do your work.

If you made pension contributions to HMRC registered pension scheme, take off the gross amount paid during the previous tax year.

Deduct the total amount of any Statutory Maternity, Paternity or Adoption Pay you were paid. But don't deduct more than £100 for any particular week. For example if you received £80 each week, add up all the amounts of £80 you received. If you received more than £100 for a week, only deduct £100 for that week.

If you were on maternity leave but your employer did not pay Statutory Maternity Pay (SMP), you may have claimed Maternity Allowance instead. For the purpose of tax credits Maternity Allowance is not income and should not be included anywhere in your tax credits claim.

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Employment and Support Allowance


Employment and Support Allowance (ESA) provides financial help to people who are unable to work because of illness or disability. It is paid by the Department for Work and Pensions (DWP).

There are two types of ESA:
• Income-related ESA.
• Contribution-based ESA. Contribution-based ESA is included as income for tax credits purposes.

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Employment Status

This means you are currently

• employed, for example if you work as an employee or you are a director of a limited company,
• self-employed, or
• not currently working.

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Estates

You (or your partner) may have an interest in the estate of a person who has died. If so, assets could have been left to you in the form of money, a trust or a property.

The capital value of these will not affect your tax credits, but any income you have from them is treated as other income.

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Foreign Income

This includes income from pension, investments and property overseas and social security payments from overseas governments.

If you receive a foreign pension, whether or not it was paid to you in the United Kingdom, you should include 90% of the full amount received (in British pounds, not the foreign currency). You may deduct any banking charge or commission paid when converting foreign currency to British pounds. If you have any questions about foreign income or your residence status, please contact the Tax Credit Helpline on Tel 0345 300 3900 or Textphone 0345 300 3909.

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Full-time Education

A young person aged 16 and under 20 is classed as being in full-time education if they are studying

• at school or college, or a similar recognised establishment
• for a qualification up to and including A level, NVQ level 3 or Scottish national qualifications at higher or advanced higher level or equivalent. This does not include studying for a university degree or similar qualification
• for at least 12 hours a week during normal term time, not including meal breaks or time spent on unsupervised study.

Education is not classed as full-time education if it is:

• provided by your child's employer
• provided through any office your child holds - for example if your child has an official role such as scout leader or councillor, and the education is provided as part of that role.


A young person aged 19 must have enrolled, been accepted for or started full-time education before they turned 19.

A young person will usually still count as being in full-time education in any week where

• as part of the curriculum, they are on holiday or preparing for exams
• they are away from school or college due to sickness or ill-health but are intending to return to that course of education
• they have ended one course of education but have registered for a further course starting in the following term, and the only reason for not currently studying is that they are waiting for that course to start.

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Household

Your household for tax credits purposes means

• you and your partner if you have one, and
• any children you are responsible for.

You are treated as having a partner if you are part of a couple. This means you are

• married, unless you are separated under a court order or your separation is likely to be permanent, or
• in a civil partnership, unless you are separated under a court order or your separation is likely to be permanent, or
• living with someone as if you are married or in a civil partnership

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Household Income

This is the income of individuals or a joint income if you are a couple.

We do not include income your children may have had, unless it is taxable in your name or your partner's name.

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Housing Benefit

This is a payment made by a local authority to help the recipient pay all or part of their rent.

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Incapacitated

For the purpose of tax credits you will be treated as
• incapacitated, if you currently receive
- Disability Living Allowance
- Attendance Allowance
- Severe Disablement Allowance
- Incapacity Benefit at the short-term higher rate or long-term rate
- contribution-based Employment and Support Allowance where you have received this allowance for 28 weeks or more, or you have received Statutory Sick Pay followed by contribution-based ESA for a combined period of 28 weeks or more
- an increase of disablement pension
- Industrial Injuries Benefit with Constant Attendance Allowance for you
- War Disablement Pension with Constant Attendance Allowance or Mobility Supplement for you, or
- you or your partner receive Council Tax Benefit or Housing Benefit with a Disability premium or Higher Pensioner Premium for you, or
• you have been provided with a vehicle under the Invalid Vehicle Scheme.
• in hospital - if one of you is an inpatient in hospital
• in prison - if one of you is either on remand awaiting trial, awaiting sentence, or serving a custodial sentence.

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Incapacity Benefit

This is a social security benefit paid by the Department for Work and Pensions (DWP).

You may be able to get Incapacity Benefit if you can't work because of an illness or disability while under State Pension age. Incapacity Benefit is a taxable benefit and is included in your income for tax credits purposes, unless you
• receive the short- term lower rate, or
• claimed it before 1995 and have received it ever since

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Income

This is money you receive from various sources. For the purpose of tax credits, we include

• taxable social security benefits
• earnings
• self-employed profits
• payment in kind
• other income

We do not include

• reimbursement of expenses which arose wholly and exclusively in the course of your work
• children's income unless it is taxable in your name or your partner's name.
• certain payments of Incapacity Benefit
• income from tax free savings
• maintenance
• certain income from property
• the Christmas Bonus or the Winter Fuel Payment
• Child Benefit
• Child Tax Credit
• Working Tax Credit
• Pension Credit
• Disability Living Allowance
• Severe Disablement Allowance
• Attendance Allowance
• Housing Benefit
• Council Tax Benefit
• Industrial Injuries Disablement Benefit
• Maternity Allowance

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Income-based Jobseeker's Allowance

This is a social security benefit paid by the Department for Work and Pensions (DWP).

If you are of working age but unemployed and actively seeking work, you may be able to get Jobseeker's Allowance. Income-based Jobseeker's Allowance is paid if you have not paid enough National Insurance contributions or you have only paid contributions for self employment and you are on a low income.

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Income Support

This is a social security benefit paid by the Department for Work and Pensions (DWP).

You may be able to get Income Support if you can't be available for full-time work and do not have enough money to live on.

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Jobseeker's Allowance

This is a social security benefit paid by the Department for Work and Pensions (DWP).

If you are of working age but unemployed and actively seeking work, you may be able to get Jobseeker's Allowance.

Contribution-based Jobseeker's Allowance is payable if you have paid, or are treated as having paid, enough National Insurance contributions. Contribution-based JSA is included as income for tax credits purposes.

Income-based Jobseeker's Allowance is payable if you have not paid enough National Insurance contributions, or you have only paid contributions for self-employment and you are on a low income.

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Maintenance

This is payment that you may receive from your ex-partner to help cover the costs of raising your child or children.

For the purpose of tax credits you do not need to tell us about these payments.

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Miscellaneous Taxable Income

Copyright royalties paid to someone who is not a professional author or composer is classed as miscellaneous taxable income.

For tax credits purposes you must tell us the full amount of miscellaneous taxable income you received.

If you are not sure what to include, please contact the Tax Credit Helpline on Tel 0345 300 3900 or Textphone 0345 300 3909.

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Notional Income

Capital treated as income

We will not normally take capital into account when we work out your tax credits. By capital we mean deposits in current and savings accounts at banks and building societies, many lump sum payments, the value of property, shares and other investments.

However, in some cases the income tax rules treat capital as income and tax it as such. For example, if you hold shares in a UK company and the company gives you new shares (called a stock dividend) instead of a cash dividend. This is part of what we call notional income and you would be expected to include it as your income in your tax credits claim.

Income that you are treated as having received

Notional income also includes income that you are treated as having received, even though you may not have.

It may include

• Trust income that, under income tax rules, is treated as the income of another person. For example, investment income of a minor child where trust funds have been provided by a parent and the amount exceeds £100. For tax credits we also treat it as belonging to another person
• Income that you have deprived yourself of to get tax credits or more tax credits
• Income that you were entitled to but did not apply for. For example, a social security benefit or allowances paid to local government councillors or civic dignitaries. This does not apply to
- a deferred state pension
- a deferred personal pension
- a deferred retirement annuity, or
- compensation for personal injury
• Income you lost out on because you worked for less than the going rate (or for nothing) if the person you are working for, or to whom you are providing a service, has the means to pay. This does not apply to
- voluntary work (for example, helping out in a charity shop or Citizens Advice Bureau, or
- employment or training programmes.

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Occupational/Personal Pensions

You must include the gross amount of pension that you received during the last tax year from an occupational or personal pension scheme.

Your pension provider should provide you with a P60 (or similar certificate) by the end of May each year, or another certificate of pension paid and tax deducted. Also include any annuity payments from a pension scheme.

If your pension includes an extra amount because you were disabled by injury on duty, or by a work related illness (compared to what you would have been paid if you had retired at the same time on ordinary ill health grounds), exclude that extra amount.

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Other Income

As well as social security benefits and earnings from your work, we also take into account other income.

You only need to include other income if it adds up to more than £300 for the tax year. If it does, you only need to enter the amount that exceeds £300 (in the case of a couple, £300 should be deducted from your joint income). However, for Adult Dependant's Grant and miscellaneous income you need to include the full amount.

The different types of other income taken into account are

• Savings, Investments and Dividends
• State Pensions
• Occupational/Personal Pensions
• income from Property
• Trusts and Settlements income
• Estates
• Foreign Income
• Notional Income
• Adult Dependant's Grant
• Miscellaneous Taxable Income

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Paid Jobs

This means any work done for or in expectation of payment.

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Partner

A partner is a person you are married to, or a person you live with as if you are married to them.

From 5 December 2005 when the Civil Partnership Act 2004 came into force, the term partner also refers to a person you are in a civil partnership with, or a person you live with as if you are in a civil partnership with them.

Note: partner does not mean a business partner.

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Payment In Kind

You may have received benefits from your employer which were not paid out in wages but which were taxable. These are called benefits in kind. Your employer should have given you information about these usually on a form P9D or P11D. You do not have to work out the amount of each individual benefit, your employer will tell you the taxable values.

For tax credits purposes we take into account the value of the following benefits in kind

• any goods and assets your employer gave you. For example, gifts of food, drink, fuel, cigarettes, clothes etc.
• any payments made by your employer which you should have paid. For example, if your employer paid your rent directly to your landlord or paid your income tax liability or your gas, telephone or electricity bills
• cash and non-cash vouchers and credit tokens, such as company credit cards. (Ignore the value of any vouchers provided for registered childcare)

If you earn at a rate of £8,500 or more a year (including any benefits in kind), or you are a company director, the following benefits are also taxable and form part of your income for tax credits purposes.

• mileage allowance payments, paid to you for using your own car for business, in excess of the tax-free approved amount.
• the cost, where your employer paid someone else for any running cost (for example, insurance). If you are not paid any mileage allowances for using your own car for business, or receive less than the approved amount of these allowances you can deduct the difference between the approved amount and what you receive from your employer as earnings.
• any company car or car fuel benefits provided by your employer
• expenses payments made to you or on your behalf. However, the amount of these payments may be reduced by claiming a deduction of expenses allowed for certain income tax purposes. For example, for expenses incurred wholly, or for travelling expenses incurred necessarily in the performance of your duties.

If you have had benefits in kind from more than one employer, add the figures together to show the amounts received from all employments.

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Pension Contributions

These are payments you or your employer make to a private pension plan. Pension contributions are usually paid monthly.

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Pension Credit

This is a social security benefit paid by the Department for Work and Pensions (DWP).

Pension Credit is made up of two parts

• Guarantee Credit, which provides a minimum income guarantee, and
• Savings Credit, which is payable from age 65 to those who have made additional provision for their retirement.

The age from which you can get the Guarantee Credit is gradually increasing to 65.

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Personal Independence Payment

Personal Independence Payment is a benefit for disabled people aged 16 to 64 (known as 'working age').

Entitlement to Personal Independence Payment is based on the help you may need towards some of the extra costs arising from your ill health or disability. Your personal circumstances are taken into account and the impact that your condition or disability has on your ability to live independently

From 2013 to 2016, Personal Independence Payment will replace Disability Living Allowance for every claimant of working age.

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Property

You must include any income you receive from property or land in the UK that you own or leased out. Don't include income from the 'rent a room' scheme.

If your rental property made a loss, relief for this loss is generally given in the same way as for income tax. Normally, the loss should be carried forward and set-off against profits from the same source in the following tax year.

If, however, part of the loss arises from capital allowances or from agricultural land, that part of the loss may be set against other income which you (but not your spouse or partner) may have, either in the tax year in which the loss was made or in the following tax year. In such cases, the amount of loss relief available for tax credits purposes is based on your tax calculations.

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Qualifying benefits test

You will meet this test if at least one of the following four descriptions applies to you, or if:

• you were entitled to the disability element of Working Tax Credit within the last eight weeks, and
• this entitlement existed because you satisfied one of descriptions 2, 3 or 4 below.


1) You are receiving one of the following benefits:

• Disability Living Allowance
• Attendance Allowance
• Industrial Injuries Disablement Benefit with Constant Attendance Allowance for you
• War Disablement Pension, with Constant Attendance Allowance or Mobility Supplement for you, or
• a vehicle under the Invalid Vehicle Scheme


2) You received one of the following benefits for at least one day in the last six months:

• Employment and Support Allowance (ESA) where you have received this allowance for 28 weeks or more, or Statutory Sick Pay(SSP) followed by ESA for a combined period of 28 weeks or more (see Note 1 below)
• Incapacity Benefit at the short-term higher rate or long-term rate
• Severe Disablement Allowance
• Income-based Jobseeker's Allowance, with a disability premium or higher pensioner premium for you
• Income Support, with a disability premium or higher pensioner premium for you
• Council Tax Benefit, with a disability premium or higher pensioner premium for you, or
• Housing Benefit, with a disability premium or higher pensioner premium for you.

Note 1: The 28 weeks does not need to be a single continuous period. You can add together:
- any periods that you received ESA, as long as they were no more than 12 weeks apart
- any periods that you received SSP, as long as they were no more than eight weeks apart
- any periods that you received SSP with periods that you received ESA, as long as they were no more than 12 weeks apart.


3) You have been training for work for at least one day in the last eight weeks, and you started training for work within eight weeks of receiving one of the following:

• Incapacity Benefit paid at the short-term higher or long term rate
• Severe Disablement Allowance
• contribution-based Employment and Support Allowance (ESA) for 28 weeks or more, or
• Statutory Sick Pay (SSP) followed by contribution-based ESA for a combined period of 28 weeks or more (see Note 2 below)

Training for work means government- run training such as those provided by the New Deal, Work Based Learning for Adults (Training for Work in Scotland) or a course that you attended for more than 16 hours or more a week to learn an occupational or vocational skill.

Note 2: The 28 weeks does not need to be a single continuous period. You can add together:
- any periods that you received contribution-based ESA, as long as they were no more than 12 weeks apart
- any periods that you received SSP, as long as they were no more than eight weeks apart
- any periods that you received SSP with periods that you received contribution-based ESA, as long as they were no more than 12 weeks apart, and you met the contribution conditions for contribution-based ESA on the days that you received SSP.


4) All of the following four points apply to you

• Point 1: You have been getting at least one of the benefits in list A or list B for 20 weeks or more (see Note 3 below), and you got this benefit within the last eight weeks.

List A
- Statutory Sick Pay
- Occupational Sick Pay
- Incapacity Benefit, paid at the short-term lower rate
- Income Support paid on the grounds of incapacity for work
- National Insurance credits awarded on the grounds of incapacity for work

List B
- Employment and Support Allowance
- National Insurance credits awarded on the grounds of limited capability for work.

Note 3: The 20 weeks does not need to be a single continuous period. You can add together:
- any separate periods that you received the benefits and credits in list A, as long as they were no longer than eight weeks apart
- any separate periods that you received the benefits and credits in list B, as long as they were no longer than 12 weeks apart.

• Point 2: Your disability is likely to last for at least six months, or for the rest of your life.

• Point 3: Your gross earnings (before tax and National Insurance contributions are taken off) are at least 20% less than they were before you had the disability.

• Point 4: Your gross earnings (before tax and National Insurance contributions are taken off) are at least £15.00 a week less than they were before you had the disability.

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Regular Hours

If you are an employee
If you are self-employed
If you do seasonal work
If you are on long term sick
If you are on maternity leave
Examples to help you work out your usual hours

Note: When you have worked out your regular hours please round down to the nearest hour. Please see the following examples

If you have worked 29 hours 30 minutes, you must enter 29 hours

If you have worked 27 hours 46 minutes, you must enter 27 hours

If you have worked 30 hours 15 minutes, you must enter 30 hours

If you are an employee

You must tell us the number of hours you usually work and are paid for each week. Include overtime if this regularly forms part of your working week. If your hours change from week to week, enter the number of hours a week that you and your employer consider to be your usual working hours.

If you are self-employed

You must tell us the number of hours you spend working in your business in a normal week.

If you do seasonal work

You may work more hours at certain times of the year, you must tell us the number of hours a week you are working now.

If you are on long term sick

You must tell us the number of hours you would normally work if you were not on sick leave.

If you are on maternity leave

You must tell us the number of hours you would normally work if you were not on maternity leave.

Examples to help you work out your usual hours

1. Jim usually works 28 hours a week. But this week he took 2 days off unpaid and only worked 17 hours. He expects to work 28 hours a week again next week, and for the foreseeable future. So his usual hours are 28 hours a week.

2. Bill is contracted to work 25 hours a week. This week he has also done 10 hours of overtime. Last week, Bill did no overtime at all, but most weeks he does 5 hours of overtime. His usual hours are therefore 30 hours a week, made up of 25 hours he is contracted to work, and the 5 hours overtime he usually does each week. The fact that in the last couple of weeks he has not worked exactly 30 hours does not matter.

3. Every fortnight, Sue works 14 hours one week and 18 hours the next. This hardly ever changes. To work out her usual weekly hours, she should therefore look at the average number of hours she works over this regular cycle. Sue's usual hours are therefore 16 hours a week.

4. Mick has worked 30 hours a week for the last 12 months. But 2 weeks ago he left his job. Although he is looking for a new job, he is not currently working at all. His usual hours are therefore nil. The fact that he has worked until recently does not affect this.

5. Anne hasn't worked at all for the last 10 years. She started a new job last week, working 20 hours a week. Her usual hours are therefore 20 hours a week. The fact that she only started last week does not alter the fact that she now usually works 20 hours a week.

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Savings, Investments and Dividends

You must include interest from any bank or building society accounts. This should be the interest before tax was taken off (the gross interest). Your cash book or bank statement will help you work out this figure. If you receive any company dividends add the tax credit shown on the voucher, to the dividend.

We do not need to know about any tax free savings, for example

• ISAs
• TESSAs
• PEPs
• Index Linked and Fixed Interest National Savings Certificates, and
• Children's Bonus Bonds

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Self-Employed

This is a person who works for themselves or in a business partnership.

Note if you are a director of a limited company you are classed as an employee and not self-employed.

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Self-Employed Profits

You will need to tell us your total self-employed profits, minus

• the gross amount of any contributions you made to a pension scheme or retirement annuity contract
• any trading losses brought forward from the previous year
• the gross amount of any Gift Aid payments you made
• any adjustment for averaging because you are a farmer or a market gardener with fluctuating profits

Working out your profits if you have not sent us your tax return

Your business profit is the difference between

• your turnover - all the money your business earned for work you have done or goods you have sold, and
• your allowable business expenses.

If you need help working out your turnover or your allowable business expenses, please call the Self Assessment helpline on 0845 9000 444.

Losses

The tax credit rules on losses operate separately from those for income tax. This means that, for tax credit purposes, you deduct the loss from

• any other income you may have for that year, or
• in a joint claim, any other income which you and your partner may have for that year.

If this does not use up the entire loss, and there is some loss remaining, the balance may be carried forward and deducted from the profits of the same business in the following year.

If you have made a trading loss or have any questions about these rules, please contact the Tax Credit Helpline on Tel 0345 300 3900 or Textphone 0345 300 3909.

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Severe Disablement Allowance

This is a social security benefit paid by the Department for Work and Pensions (DWP).

You may have been able to claim Severe Disablement Allowance if you were unable to work for at least 28 weeks in a row because of illness and disability.

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Social Security Benefits

Social Security Benefits are paid by the Department for Work and Pensions (DWP).

The following is a list of the social security benefits we include as income and you need to tell us about

• Carer's Allowance
• Incapacity Benefit
• Income Support, if it is taxable
• Contribution-based Jobseeker's Allowance
• Contribution-based Employment and Support Allowance
• Bereavement Allowance

Do not include

Child Benefit, Child Tax Credit, Working Tax Credit, Pension Credit, Disability Living Allowance, Severe Disablement Allowance, Attendance Allowance, Housing Benefit, Council Tax Benefit, Industrial Injuries Disablement Benefit or Maternity Allowance.

If you receive

State Pensions including the Retirement Pension, Industrial Death Benefit, Widow's Pension, Widowed Mother's Allowance and Widowed Parent's Allowance, they should be entered as other income.

Your social security office may have sent you a record of the taxable amount of benefit you were paid in the previous tax year. Add on any extra amount you were paid in these benefits for your children. Contact your local social security office, or Jobcentre Plus office, if you do not have details of the amount of taxable benefits paid to you in the previous tax year.

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State Pension

This is a payment made by the Department for Work and Pensions (DWP).

You need to tell us the total amount of State Retirement Pension you received last year.

For tax credits purposes, you must include the following amounts

• the basic (or old age) pension
• the social security pension lump sum
• State Earnings Related Pension (SERPS)
• Graduated Pension (graduated retirement benefit)
• Industrial Death Benefit
• Widow's Pension
• Widowed Parent's Allowance
• any increase for a dependent child
• any incapacity addition or addition for a dependent adult, and
• any increases paid by DWP or Department for Social Development to uprate a guaranteed minimum pension.

Do not include the Christmas Bonus and Winter Fuel payment.

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Statutory Maternity Pay

To help you take time off work when you have a baby, you may be able to get Statutory Maternity Pay (SMP).

If you had a child (or adopted a child) in the last tax year you may have taken statutory maternity, adoption or paternity leave during the year and your employer may have paid you statutory maternity, adoption or paternity pay.

SMP is a taxable income, but for tax credits purposes up to £100 a week is ignored. You need to deduct £100 from your income for each week you received SMP of more than £100. If your payments were less than £100 a week, deduct the amount you got each week.

If you were on maternity leave but your employer did not pay you SMP, you may have claimed Maternity Allowance instead. Do not include Maternity Allowance received as this is not counted as income for tax credits purposes.

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Statutory Sick Pay

If you are an employee and unable to work because you are ill, you may be able to get Statutory Sick Pay (SSP). Some employers have their own sick pay scheme instead.

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Strike Pay

This is payment received from your union if you were involved in industrial action.

From the 11th consecutive day of any strike action you are no longer due Working Tax Credit (WTC). If you strike for more than 10 days you must tell us within 1 month. You cannot make a new claim for WTC until you have resumed work.

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Subject to Immigration Control

You are subject to immigration control if

• the Home Office says your leave to remain in the United Kingdom (UK) is on the condition that you do not have recourse to public funds, or
• you require leave to enter or remain in the UK, but do not have it.

If you are subject to immigration control, you may still be entitled to tax credits if

• you are claiming as a couple and only one of you is subject to immigration control
• you are a family member of a national of a country in the European Economic Area (EEA) or of Switzerland
• you are a sponsored immigrant under the Home Office rules
• you (or your partner) are legally working in the UK and are nationals of Algeria, Morocco, San Marino, Tunisia or Turkey.
• you (or your partner) are national of Croatia or Turkey and you are legally residing in the UK

You are not subject to immigration control if you are

• a UK national
• a national of another country in the EEA or of Switzerland
• someone who has been granted indefinite leave to remain in the UK (including those granted humanitarian protection or discretionary leave, previously exceptional leave)
• someone who has been granted asylum in the UK.

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Tips and Gratuities

This is payment or a gift of money made over and above the charge for the service provided.

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Trusts and Settlements

Trusts and Settlements income is any income you receive under any disposition, trust, covenant, agreement, and arrangement or for certain purposes, transfer of assets.

If you have received income from a trust, settlement or a deceased person's estate, the trustees will have given you a certificate telling you what income was paid to you.

You need to tell us the full amount before any tax was taken off.

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UK

UK means the United Kingdom.

Countries in the UK are:

• England,
• Scotland,
• Wales, and
• Northern Ireland.

Note: The Isle of Man and Channel Islands are not part of the UK.

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Working Tax Credit (WTC)

Working Tax Credit (WTC) is for people who are employed or self employed (either on their own or in a business partnership), who

• get paid for their work
• expect to go on working for at least 4 weeks
and who are either
• aged 16 or over and responsible for at least one child, and usually working at least 16 hours a week, or
• aged 16 or over and disabled, and usually working at least 16 hours a week, or
• aged 25 or over and usually working at least 30 hours a week, or
• aged 60 or over, and usually working at least 16 hours a week.

From April 2012, couples who are responsible for a child or young person have to work at least 24 hours between them with one person working at least 16 hours per week.

WTC is made up of the following

• basic element, paid to any working person who meets the conditions
• lone parent element, for single parents
• couples element, for couples
• 30 hour element, for people who work at least 30 hours a week. Couples with at least one child can claim the 30 hour element if they work at least 30 hours a week between them providing at least one of them works 16 hours or more a week
• disability element, for people with a disability
• severe disability element, for people with a severe disability
• childcare element, for people who spend money on registered or approved childcare.

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Young Person

From their 16th birthday, up to their 20th birthday, a person will be known as a qualifying young person, providing they are

• receiving full-time education or
• are on an approved training course

A person is also classed as a qualifying young person, and will still be treated as a member of the claimant's family, where they are

• under the age of 18 and it is within 20 weeks of leaving full-time education or an approved training course, and
• we were notified that they are registered with the careers service, Connexions or similar within 3 months of the date they left full-time education or an approved training course

To qualify, young persons must not be

• in receipt of Income Support, Income Related Employment and Support Allowance or Income-based Job Seeker's Allowance in their own right
• normally engaged in remunerative work for more than 24 hours per week having ceased full time education or approved training.

Notes:

• The approved training course does not have to result in a named qualification.

• From a child’s 16th birthday up until the following 31 August, there is no requirement for them to be in full time education or approved training - but all of the other conditions continue to apply.

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