Independent Taxation Manual - IN1554

Children's Tax Credit (CTC): Combination cases; part of CTC received by married or unmarried couple

PARAGRAPH 7(2) SCHEDULE 13B ICTA 1988

For a summary of what to do in combination cases see In1551.

You firstly have to consider if any party can claim Children's Tax Credit (CTC) in respect of another child see In1552.

Then you have to split the CTC between the parties see In1553.

For 2002-03 where the qualifying child was also a qualifying baby see In1385, and in particular In1398.

Where one of the parties receiving a split of the CTC is a married or unmarried couple you then have to consider how the couple want to share their split of CTC between them. For details of this see In1430 onwards using the split of CTC the couple receive as the starting point.

EXAMPLE (tax year 2001-02)

A married couple have a girl living with them aged 13. The wife is the mother of the girl. Although the husband is not the father he can claim CTC, as the girl is a step-child of his. The girl lives part of the year with the married couple and part of the year with her natural father. Neither party can claim CTC in respect of any other child. The parties agreed to share the CTC 40% to the girl's father and 60% to the married couple. The full amount of CTC for the year is £5,200 at 10%.

The married couple's split of CTC is £3,120 at 10%. They then decide to share that split equally between them by both claiming CTC. Neither husband nor wife has any income above the basic rate limit. Both the husband or wife then get CTC of £1,560 at 10% each.