Who Gets Child Tax Credits in Shared Custody?
The question of who gets child tax credits in a shared custody arrangement can be complicated since only one household 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.
What are child tax credits?
Child tax credit is a tax-free amount paid to help with the costs of bringing up a child. You do not need to be working to claim.
If you are responsible for children aged 16 or under, you may be able to claim child tax 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 full time eligible education or training.
Child tax credit is not intended to help with childcare costs. You can apply for an extra amount to help with approved childcare separately under the working tax credit system or through childcare vouchers from your employer. If you receive childcare vouchers from your employer, the amount of this will be deducted from your entitlement awarded through working tax credit.
Who Gets Child Tax Credits in Shared Custody?
Child tax credits 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.
Only one household can make a claim. Both parents cannot claim for the same child.
In cases of shared custody, and both parents have legal custody of the child, it can become difficult to determine who can claim the child tax credit. If more than one claim is made for the same child, it is the person with ‘main responsibility’ who is normally eligible to claim child tax credit for that child.
When deciding who has main responsibility for a child, the number of days the child lives with each parent will be an important factor. This is 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 child tax credits.
Those making the competing claims may jointly elect which one of them satisfies the ‘main responsibility’ test for the child.
On this basis, you could agree to split the Child Tax Credits by alternating who claims each year, since you cannot split claims mid year or alternate monthly payments.
If you are unable to agree on who should claim, you may both put in a claim for child tax credit and The Tax Credit Office will decide for you. This will be based on a number of factors, such as:
- 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.
- What the income of the household is, the house with the lower income will probably receive the benefit.
- Which address the child registered at for school, doctors etc.
- The ages of the children will also factor in to the decision as well as the number of children.
This list is by no means exhaustive and the Tax Credit Office may use other considerations to determine which parent can claim child tax credit.
How to Claim
How you claim will depend on the circumstances.
If you and your ex partner have reached a decision on who will receive the Child Tax Credit after you have separated, it may not be necessary to make a new claim. You may only need to notify the Tax Credit Office of a change in circumstances if you are already claiming Child Tax Credit. This can be done either over the phone or online.
However, if you have not been claiming Child Tax Credit prior to separating and you will now be in receipt instead of your former partner, then you will need to make a new claim using the Child Tax Credit claim form.
If you cannot agree on who should make the claim for Child Tax Credit, you may both make a new claim and the Tax Credit Office will determine who will be awarded the assistance.
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.
If you are in a Universal Tax Credit area, you may only make a new claim for Child Tax Credit if you have 3 or more children or you are of pensionable age.
Documents you will need to support your claim
The Tax Credit Office may ask you for your National Insurance number and proof of your identity, which will be either a birth certificate, a valid passport or valid driving licence.
You may also be required to give your annual income, if you have no income, tell them that. However, if you are earning you will need either your P60, wage slips or bank statements.
How you will be paid
The parent who is awarded the Child Tax Credit will be paid directly into their bank account either weekly or every 4 weeks depending on which they choose. 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.
Child tax credit and Universal Credit
Child tax credit is being replaced by Universal Credit. Universal Tax Credit will start to replace existing Child Tax Credit in all areas from July 2019. Universal Tax Credits are currently only in place in certain areas (at August 2018). The government expects the full changeover to be completed by March 2023. Any new claims may need to be made under the new system where available in the parent’s region. You cannot apply for Child Tax Credit and Universal Tax Credit at the same time.
What other support can I claim?
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. For example, if you are working but on a low income, you may be able to claim Working Tax Credit on top of your Child Tax Credit. Even if you are not claiming Child Tax Credit, you may still able to apply for the Working Tax Credit.