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18 June 2000
£1.7 BILLION BOOST FOR BRITAIN'S FAMILIES
5 million families in Britain are set to gain up to £442 a year off their tax bills next year, when the new Children's Tax Credit comes into force.
A national press and radio advertising campaign launched today by Paymaster General Dawn Primarolo alerts parents to the new Credit, and encourages them to claim it.
Dawn Primarolo said:
"The Government's ambition is that every child should have the best possible start in life. The new Children's Tax Credit, which comes into force in April 2001, aims to get help and support to those taxpaying families who need it most. It will provide families with up to £442 a year off their tax bills, a £1.7 billion boost for Britain's families.
"I would urge every parent - whether married or unmarried - with children under the age of 16 to look out for the information soon to be sent out by the Inland Revenue. There is also a Helpline - 0845 300 1036 - for anyone who has any queries.
"Building on the package of Government help already available - such as the Working Families Tax Credit, the National Minimum Wage and the recently announced £4.5 million worth of start-up grants for childminders - the new Credit is an important step in delivering a fairer tax system for families with children. It is part of the Government's commitment to making work pay and giving children the best possible start in life."
Notes to Editors
The Children's Tax Credit was announced in the Chancellor's 1999 Budget (see press release Budget 99 Inland Revenue 1). In his latest Budget the Chancellor increased the amount of the credit from £416 to £442 (see press release Budget 2000 REV2). The Inland Revenue want people who are entitled to the relief to claim it, and has today started a national advertising campaign to encourage people to claim their entitlement.
What is the Children's Tax Credit?
It's a new tax relief for families, with children, who pay income tax. It could make families up to £442 a year (£8.50p per week) better off by reducing their family's tax bill. There is one Children's Tax Credit per family. It begins in April 2001 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.
How much is it worth?
Depending on circumstances, the Children's Tax Credit can reduce income tax paid by up to £442 a year (£8.50 a week).
Who can claim it?
Families - either couples (married or unmarried) or lone parents, who have one or more child under 16 living with them for at least part of the tax year.
Which partner in a couple should claim it?
Couples should choose which partner will claim the credit, or decide to share the credit equally between them. If one or both partners is a higher rate taxpayer, then the partner with the higher income must claim it.
How does the credit work?
The credit is targeted at low or middle income families. The credit of £442 is gradually withdrawn at the rate of £1 for every £15 of income taxed at the higher rate.
What happens now?
Starting next month, the Inland Revenue will send claim forms to families with children who pay tax through PAYE. If parents are self-employed, they can claim Children's Tax Credit in the normal way on their tax return for the year beginning April 2001.
How do parents get the money?
If you pay tax through PAYE, then the Inland Revenue will adjust your tax code after the claim form has been returned to them. This will mean parents will get up to £442 over the course of 2001/2, having less tax deducted by their employer each week or month. If parents are self-employed, the tax relief should be claimed when tax returns are completed for the year beginning 6 April 2001.
Further information
For help in completing the claim form, or have parents have further questions, they should contact the Children's Tax Credit helpline on 0845 300 10 36. If parents want a leaflet on Children? Tax Credit then they should telephone the Inland Revenue order-line on 0845 9000 444. If parents pay tax through PAYE and have not received a claim form by the end of July, they should contact their local tax office.
Regional breakdown
5 million families in Britain will benefit from the new Children's Tax Credit. A breakdown is as follows:
North East - 225,000
North West - 625,000
Yorkshire & Humberside - 450,000
East Midlands - 400,000
West Midlands - 450,000
East of England - 450,000
London - 475,000
South East - 675,000
South West - 475,000
Wales - 250,000
Scotland - 400,000
Northern Ireland - 125,000