FINANCE BILL 2000
CLAUSE 34: CHILDREN?S TAX CREDIT
SUMMARY
1. Clause 34 specifies that when the children's tax credit is introduced in 2001-02 the amount will be set at £4,420, given at the rate of 10 per cent, instead of £4,160. (*REV2).
DETAILS OF THE CLAUSE
2. Sub-section (1) provides that the amount of £4,160, specified in section 257AA(2) Income and Corporation Taxes Acts (ICTA) 1988 as the amount by reference to which the children's tax credit is to be calculated, is to be replaced by the amount of £4,420. In accordance with section 256(2) ICTA 1988, relief for that amount is given at 10 per cent..
3. Sub-section (2) provides for the change to take effect in 2001-02, the first year for which the children's tax credit is available.
BACKGROUND
This clause increases the amount of children's tax credit from £4,160 to £4,420 at 10 per cent.. From 2001-02, the credit will be worth up to £442 off an individual's tax bill, instead of £416.
5. The children's tax credit was introduced by Section 30 and Schedule 3 of the Finance Act 1999 and takes effect in 2001-02.
6. The credit will be available to individuals who have one or more children under 16 resident with them. Only one credit is available to a man and a woman, married or unmarried, who are living together. For a claimant who is a higher rate taxpayer, the credit will be gradually withdrawn, depending on the amount of income in the higher rate band.