Third Child tax credit query

anna_1977

Hi,
Apologies if this has been asked already.

Theoretical question, I have 2 girls now aged 20 and 18, I still claim a small amount of Child Tax Credit for D2 which stops in June.

IF I choose to have another child in the next 3 year will I be exempt from tax credits? I believe the new rules are not for third child?

Thanks

Icequeen99

In your case you would be able to claim for the new child, because you wouldn't be claiming for the oldest child.

IQ

anna_1977

Thank you

andrewmp

People are going to be stuck in a benefit trap once these changes come in.

Lets say a family with three young kids. One partner earning £25k a year, the other looking after the kids. The kids all go to school and the carer looks for a job, she gets offered a part time job around school hours earning £8k per year. This pushes the family over the threshold and would end the tax credit claim.

In the current system that's fine, she takes the job and earns enough so that tax credits are no longer required. In the new system, she knows that if she loses her job, she'll never be able to claim for child number 3 again, so the claimant will have to engineer a situation whereby the family earn as close to the earnings threshold as possible, without going over it.

This is a benefit trap, you can't blame families for worrying about taking a job which could end tomorrow and would mean they could never claim again for child number 3.

andrewmp

blondebubbles wrote: »

An increase in household income wouldn't end a claim. It would reduce the claim to zero but the claim would remain active.

So can literally anyone claim and get a zero award? So in that case, if someone started earning too much, they could just keep claiming and get a zero award for the next 15 years or whatever, then if salary dropped they would get an award?

Icequeen99

The 3 child rule for tax credits doesn't work in that way. It is based on the DOB of the children not when you claimed.

IQ

andrewmp

Icequeen99 wrote: »

The 3 child rule for tax credits doesn't work in that way. It is based on the DOB of the children not when you claimed.

IQ

It does of UC and everyone will move to UC eventually.

But the small print of his welfare-slashing Budget tells a very different story.

It shows many big families are likely to be hit despite already having three or more offspring before April 2017.

A loophole will count families as a 'new claim' if they've had a 6-month break in claiming tax credits.

And those who already have three children - but who claim for the first time after April 2017 - will also count as a 'new claim', meaning they only get paid for two children.

That means anyone who lifts themselves out of poverty for a long stretch but then loses their job again will lose thousands of pounds.

Obviously everyone is going to move over to UC eventually, so once everyone is on UC, families with a third kid born before 2017 will be stuck in a benefit trap

andrewmp

In addition to ‘do nothing’ the Government considered whether the change should apply to all
families in receipt of tax credits and Universal Credit. Recognising the impact this could have on
families already in receipt of tax credits or Universal Credit, the Government decided to proceed
with the proposed option. Entitlement will remain at the level for two children for households who
make the choice to have more children, in the knowledge of the policy. In the case of new claims
to Universal Credit it will apply to families who have been outside of the Universal Credit and tax
credit benefit systems for the previous 6 months. This will result in fairness to both claimants and
to the taxpayer.

Providing the same level of support provided for families with 2 children receiving
Universal Credit to those families with three or more children and who make a new claim
after April 2017. To achieve this, third or subsequent children born after April 2017 will no
longer trigger entitlement to additional support within Universal Credit. This will also apply
to families who make an entirely new claim to Universal Credit from April 2017;

The bit in bold is where the trap is at!

bloolagoon

andrewmp wrote: »

People are going to be stuck in a benefit trap once these changes come in.

Lets say a family with three young kids. One partner earning £25k a year, the other looking after the kids. The kids all go to school and the carer looks for a job, she gets offered a part time job around school hours earning £8k per year. This pushes the family over the threshold and would end the tax credit claim.

In the current system that's fine, she takes the job and earns enough so that tax credits are no longer required. In the new system, she knows that if she loses her job, she'll never be able to claim for child number 3 again, so the claimant will have to engineer a situation whereby the family earn as close to the earnings threshold as possible, without going over it.

This is a benefit trap, you can't blame families for worrying about taking a job which could end tomorrow and would mean they could never claim again for child number 3.

But isn't that the case for those with 3 children above the limits now? no one knows what the future holds but if everyone engineers their income around benefits the country wouldn't survive.

andrewmp

bloolagoon wrote: »

But isn't that the case for those with 3 children above the limits now? no one knows what the future holds but if everyone engineers their income around benefits the country wouldn't survive.

No. It's different now. Someone with three kids can safely earn more and take themselves out of tax credits, knowing they can claim for all their children if their wage drops. In the future they'll be trapped or take a huge risk.

SkyeKnight

andrewmp wrote: »

No. It's different now. Someone with three kids can safely earn more and take themselves out of tax credits, knowing they can claim for all their children if their wage drops. In the future they'll be trapped or take a huge risk.

They should still be claiming Tax Credits though, even with a nil award. If you don't and you lose your job half way through the tax year and end up qualifying for Tax Credits for that year you will only get paid for the time you claim. By keeping your claim going you will qualify for a full year's payments instead of half that amount.

By the way, I phoned Tax Credits and asked about the new rules and they say a nil award will count as a continous claim and mean you never have to make a "new" claim.