08/01
5 February 2001
BROWN HAILS NEW FAMILY TAX CUT - PUTTING FAMILIES FIRST
ALISTAIR DARLING OUTLINES NEW MEASURES FOR THE CHILD SUPPORT AGENCY
The Children's Tax Credit - a family tax cut which will help 5 million families with children get up to £442 off tax bills - was launched today by Chancellor Gordon Brown, Social Security Secretary Alistair Darling and Paymaster General Dawn Primarolo.
A major £4.7 million national advertising campaign will encourage families to apply for the tax cut, helping them when they need it most - when children are growing up. A Helpline is available - 0845 300 1036 - for more information and help.
Gordon Brown said:
?All parents should have more support when they need it most - when children are growing up - and all, including absent parents, have a duty to fulfil their responsibilities. Our approach is firstly, to ensure the tax system acknowledges the costs of bringing up children - every family with children should have more support, improving family prosperity and reducing child poverty; second, we want to make it easier for parents to spend more time with their children by helping families balance work and home; and third, we want to ensure that all parents take seriously their responsibilities to their children, even where they are not living with them day-to-day.
?Today, with the national advertising launch of the Children's Tax Credit - our family tax cut - the tax system, which for years has ignored the very existence of children, is now recognising the very real costs of bringing up children. Building on the foundation of Child Benefit, paid to every one of 7 million mothers in the country, the new Children's tax Credit is central to the new system of financial support for families.
?The maximum amount of £442 a year is on top of Child Benefit - for a family on £30,000 a year, that's the equivalent of nearly 2 pence off the basic rate of tax; for a family on average earnings of £25,000, it's the equivalent of 2.5 pence; and for a family on £15,000, it's equivalent to 5 pence off the basic rate. People should apply by the end of February to see the difference in their April pay packet.
?But I want to do more to support families in the Budget, and to meet the needs of parents who wish to stay at home for longer after the birth of a child; getting people back into work with incentives such as WFTC and the 10p rate has been our priority, but now it is time to do more for mothers who want to stay at home, particularly in the first months and years of their young child's life; I am confident that we will be able to take steps to improve arrangements for families facing additional costs and pressures where there are new born children.
?Our approach, now and after the next Budget - rising Child Benefit for all, the family tax cut for millions, helping parents to balance work and family responsibilities, and ensuring all parents take responsibility for their children.?
Alistair Darling outlined the steps the Government has taken to ensure parents take responsibility for their children:
?Most parents are happy to meet their responsibilities, but a minority try to evade their duty, and by doing so deny children their right to a decent start in life. That is why our reform of child support is so important; over one million children will benefit when the new, simplified assessment system come into force at the CSA, getting more money, more quickly, to more children.
?But we have to ensure those absent parents who evade their responsibilities do their best for their children. Our new powers, introduced this week, will ensure absent parents share in the care of their children. But in April, we will get tougher - courts will crack down on those who repeatedly avoid their responsibilities by removing driving licenses. A strong reminder that rights bring responsibilities, and a small price to pay to give children a better start in life.?
NOTES TO EDITORS
1. The Children's Tax Credit, announced in Budget 1999, comes into force in April 2001. It's a new tax relief for families, with children, who pay income tax. It could make families up to £442 a year (£8.50 a week) better off by reducing the family tax bill. There is one Children's Tax Credit per family, and is available to married or unmarried couples and single parents with a child or children under 16. The credit is given as a reduction in the amount of income tax paid. Further information is available in the attached factsheet.
2. The new powers introduced this week by the Child Support Agency will:
- make it a criminal offence to withhold information without reasonable excuse or to supply false information;
- allow the CSA to presume parentage where a man is married to the mother of a child at any time between conception and birth of the child or - if unmarried - registered on the birth certificate as the father of the child;
- presume a man is the father if he refuses to take a DNA test or accept a positive result;
- extend powers abroad to recover child maintenance from members of the armed forces or civil servants or from those privately employed and paid via a UK payroll.
The Children's Tax Credit: Your Questions Answered
What is the Children's Tax Credit?
It's a new Family Tax Cut which will help families when they need it most: when they have their children and when their children are growing up.
How does it work?
It's an income tax cut. It's not a payment to you, but a way of reducing the amount of tax you pay. The value is reduced if you pay tax at the higher rate.
How much is it worth?
Up to £442 a year, but the Chancellor has said that he aims to increase it to £520 a year
Who is eligible?
People who have a child aged under 16 living with them for at least part of the year, and who pay tax. The Family Tax Cut replaces the Married Couples Allowance, but it's not just for married couples - unmarried couples and single parents can also receive it.
When should I apply?
You can claim it now if you pay tax through PAYE. It's introduced on 6 April this year, and if you get your claim in by the end of February you could receive the extra in your April pay packet.
Will I have to apply each year?
As long as your circumstances don't change, you only need to apply once.
I bet I have to fill in a really difficult form.
No, it's a really simple application form. The Revenue asks:
- you, and if appropriate your partner, for your name and national insurance number
- whether the child is your own child or looked after at your expense
- whether the child lives with you all the time
- the date of birth of the child you are claiming for
- whether you are married, an unmarried couple or a lone parent
If you are a couple, you need to state:
- whether you or your partner are the higher earner
- whether either of you pay tax at the higher rate
Can I claim the Family Tax Cut for each child living with me?
No. You can only claim one credit per family, even if you have more than one child aged under 16 living with you.
What happens if my child has a 16th birthday during the tax year?
If your child turns 16 during the year, you can still receive the credit for the whole of that tax year.
I've heard that if you pay tax at 40 per cent, you can't apply for the Family Tax Cut.
You can earn up to around £40,000 a year and still get a tax reduction through the CTC. If either you or your partner pays tax at the higher rate, the partner with the larger income will receive the credit.
Neither my partner nor I pay tax at the higher rate. Who should apply?
The higher earner must sign the application form, but you and your partner can decide together who receives the credit, or you can split it. The lower earner only needs to sign the form if they are getting all or part of the credit.
I work for myself, so I don't have a tax code. How do I claim the Family Tax Cut?
If you're self-employed, you can claim the credit as part of your 2001/2002 tax return.
What should I do if I want more information?
If you're not sure whether you're eligible or you are a PAYE taxpayer and simply need an application form, visit you local tax office or call the CTC helpline on 0845 300 1036.