The Working Tax Credit (Entitlement and Maximum Rate) (Amendment) Regulations 2003

Explanatory Note

(This note is not part of the Regulations)

These Regulations, made under powers conferred by the Tax Credits Act 2002 (c. 21) (“the Act”), amend the Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002 (S.I. 2002/2005) (“the principal Regulations”).

Regulation 1 provides for citation and commencement; and regulation 2 provides for the principal Regulations to be amended.

Regulation 3 amends regulation 2 of the principal Regulations, which deals with interpretation. In addition to dealing with matters of a clerical and drafting nature, this regulation makes amendments to take account of the rewriting of the income tax legislation on employment income by the Income Tax (Earnings and Pensions) Act 2003 (c. 1).

Regulation 4 makes minor amendments to regulation 4 of the principal Regulations, which deals with entitlement to the basic element of working tax credit. Section 11(2) of the Act provides that this element must be included in determining the maximum rate at which a person may be entitled to working tax credit.

Regulations 5 to 7 exercise powers conferred by section 10 of the Act, which provides that the entitlement of a claimant to working tax credit is dependent on the claimant being in qualifying remunerative work. Regulation 5 substitutes regulation 5 of the principal Regulations to deal in greater detail with time off in connection with maternity, paternity and adoption; and regulation 6 substitutes regulation 6 of the principal Regulations to deal in greater detail with periods of illness or incapacity for work. Regulation 7 inserts new regulations 7A, 7B and 7C into the principal Regulations to deal with strike periods, persons suspended from work and pay in lieu of notice.

Regulation 8 substitutes regulation 9 of the principal Regulations, which deals with entitlement to the disability element of working tax credit. Section 11(3) of the Act provides that this element must be included in determining the maximum rate at which a person may be entitled to working tax credit. The principal difference between the substituted regulation and its predecessor is that the link between entitlement to this element and the date of the making of the claim has been removed. The substituted regulation 9 contains references to an initial claim, to training for work and to a period of training for work; but, since the substituted regulation 9 is long, the opportunity has been taken to place this additional material in two new regulations. Regulation 9A accordingly deals with initial claims, and regulation 9B with training for work and with periods of training for work.

Section 11(5) of the Act provides that the maximum rate at which a person may be entitled to working tax credit may involve such other elements as may be prescribed; and regulation 3(1) of the principal Regulations prescribed a number of other elements, which were then dealt with in greater detail in regulations 10 to 18 of those Regulations. Regulations 9 and 11 of these Regulations make detailed amendments to the provisions relating to two of those elements: the 30-hour element and the lone parent element respectively. Regulation 10 substitutes regulation 11 of the principal Regulations, which is concerned with the second adult element, to deal with drafting matters and to make additional provision where one claimant is serving a custodial sentence of more than twelve months.

Regulations 12 to 16 exercise powers conferred by section 11 of the Act, which is concerned with the child care element of working tax credit.

Regulation 12 amends regulation 13 of the principal Regulations. Paragraphs (2) and (6) correct drafting errors; paragraph (3) extends entitlement to the childcare element to couples where one partner is in qualifying remunerative and the other is an in-patient in hospital or is in prison; paragraph (4) substitutes regulation 13(3) and (4) of the principal Regulations to deal with the wider ambit of regulation 5 of those Regulations and to deal with drafting changes; and paragraph (5) provides that a person is incapacitated for the purposes of what is now paragraph (1)(c)(i) of that regulation when in receipt of short term incapacity benefit payable at the higher rate under section 30A of the Social Security Contributions and Benefits Act 1992 (c. 4).

Regulation 13 amends regulation 14 of the principal Regulations as follows. First, charges in respect of care provided by a relative in the child’s home are excluded from the description of child care charges. Secondly, a drafting error in paragraph (2)(d) is corrected. Thirdly, the definition of child care for the purposes of the child care element of the working tax credit is extended to include care provided in the child’s home in accordance with the Tax Credits (Approval of Home Care Providers) Scheme 2003 (S.I. 2003/463) and care provided by a domiciliary care worker under the Domiciliary Care Agencies Regulations 2002 (S.I. 2002/3214).

Regulations 14 and 15 amend regulations 15 and 16 of the principal Regulations to provide that child care charges are to be rounded up to the nearest whole pound and to amend the method of calculating the average weekly charge where charges are for variable weekly amounts. Regulation 15 also corrects drafting errors in paragraphs (1)(b) and (3)(b) of regulation 16 of the principal Regulations.

Regulation 16 corrects a drafting error in regulation 20(3) of the principal Regulations.