The Tax Credits Up-rating Regulations 2008

Statutory Instruments

2008 No. 796

Tax Credits

The Tax Credits Up-rating Regulations 2008

Made

26th March 2008

Coming into force

6th April 2008

As a result of carrying out in the tax year 2007–08 a review of the amounts specified in section 41(2) of the Tax Credits Act 2002(1) (“the Act”) and in accordance with section 41(1) of the Act, the Treasury have determined that Regulations should be made prescribing increases in some of those sums.

A draft of these Regulations was laid before Parliament in accordance with section 66(1) and (2)(a) of the Act and approved by resolution of each House of Parliament.

Accordingly, the Treasury make the following Regulations in the exercise of the powers conferred upon them by sections 7(1)(a), 9, 11, 13 and 65(1) of the Act.

Citation, commencement, interpretation and effect

1.—(1) These Regulations may be cited as the Tax Credits Up-rating Regulations 2008 and shall come into force on 6th April 2008.

(2) In these Regulations—

“the Child Tax Credit Regulations” means the Child Tax Credit Regulations 2002(2);

“the Entitlement Regulations” means the Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002(3);

“the Income Thresholds Regulations” means the Tax Credits (Income Thresholds and Determination of Rates) Regulations 2002(4).

(3) These Regulations have effect in relation to awards of tax credits for the tax year beginning on 6th April 2008 and subsequent tax years.

Amendment of the Child Tax Credit Regulations

2.—(1) The Child Tax Credit Regulations are amended as follows.

(2) In regulation 7(4)(individual element)—

(a) in sub–paragraph (a) for “£4,285” substitute “£4,625”;

(b) in sub–paragraph (b) for “£5,265” substitute “£5,645”;

(c) in sub–paragraph (c) for “£1,845” substitute “£2,085”;

(d) in sub–paragraph (d) for “£4,285” substitute “£4,625”;

(e) in sub–paragraph (e) for “£5,265” substitute “£5,645”; and

(f) in sub–paragraph (f) for “£1,845” substitute “£2,085”.

Amendment of the Entitlement Regulations

3.  For the Table in Schedule 2 to the Entitlement Regulations (Maximum Rates of the elements of a working tax credit) substitute the Table set out in the Schedule to these Regulations.

Amendment of the Income Thresholds Regulations

4.—(1) The Income Thresholds Regulations are amended as follows.

(2) In regulation 3(2) (first income threshold for those entitled to working tax credit) for “£5,220” substitute “£6,420”.

(3) In regulation 3(3) (first income threshold for those entitled to child tax credit) for “£14,495” substitute “£15,575”.

(4) In regulation 7(3) (determination of working tax credit) —

(a) in step 4 for “£5,220” substitute “£6,420”.

(b) in step 5 for “37%” substitute “39%”.

(5) In regulation 8(3) (determination of child tax credit)—

(a) in step 4 for “£14,495” substitute “£15,575”.

(b) in step 5 for “37%” substitute “39%”.

Dave Watts

Frank Roy

Two of the Lords Commissioners of Her Majesty’s Treasury

26th March 2008

Regulation 3

SCHEDULE

Table substituted in Schedule 2 to the Entitlement Regulations

Relevant element of working tax credit	Maximum annual rate
1.  Basic element	£1,800
2.  Disability element	£2,405
3.  30 hour element	£735
4.  Second adult element	£1,770
5.  Lone parent element	£1,770
6.  Severe disability element	£1,020
7.  50 plus element–
(a)  in the case of a person who normally undertakes qualifying remunerative work for at least 16 hours but less than 30 hours per week; and	£1,235
(b)  in the case of a person who normally undertakes qualifying remunerative work for at least 30 hours per week	£1,840

EXPLANATORY NOTE

(This note is not part of the Regulations)

Section 41 of the Tax Credits Act 2002 (c. 21) requires the Treasury, in each tax year to—

(a) review the amounts referred to in subsection (2) of that section,

(b) prepare a report of each review; including a statement of what each of the amounts would be if it had fully retained its value, and

(c) publish the report and lay a copy of it before each House of Parliament.

The Treasury’s report of the review in respect of the tax year 2007-08 was laid before Parliament on 6th February 2008 and published.

In consequence of the review the Treasury have made these Regulations, prescribing increases in certain of the sums required to be reviewed under section 41.

The figures in these Regulations were last amended by the Tax Credits Up-rating Regulations 2007 (S.I.2007/828). The figures referred to in those Regulations are superseded by the figures referred to in these Regulations.

Regulation 2 amends regulation 7(4) of the Child Tax Credit Regulations 2002, increasing the maximum rate of the individual elements of child tax credit.

Regulation 3 and the Schedule amend Schedule 2 to the Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002 by substituting a new Table prescribing the maximum rates for the elements of working tax credit other than the child care element.

Regulation 4 increases the first income threshold for those entitled to working tax credit and child tax credit in regulations 3(2) and 3(3) of the Tax Credits (Income Thresholds and Determination of Rates) Regulations 2002 and the threshold amounts shown at step 4 in regulation 7(3) and step 4 in regulation 8(3) and the percentage amounts in regulation 7(3) and in regulation 8(3) of the amount by which the income for the relevant period exceeds the threshold for the relevant period.

A full regulatory impact assessment has not been produced for this instrument as no impact on the private or voluntary sectors is foreseen.

(1)

2002 (c. 21).

(2)

S.I. 2002/2007, last amended by S.I. 2007/828; there are other amending instruments but none is relevant.

(3)

S.I. 2002/2005, last amended by S.I. 2007/828; there are other amending instruments but none is relevant.

(4)

S.I. 2002/2008, last amended by S.I. 2007/828; there are other amending instruments but none is relevant.