Tax credits and early years e-bulletin August 2018 | CPAG

Tax credits and early years e-bulletin August 2018

22 August 2018

The Scottish Government has published the results of its research involving experience panels and other user groups to help design the new system to deliver the Best Start Grant. The Scottish Government’s response includes the following commitments:

  • Making sure people can apply online, in person, by phone or by a paper form
  • Giving people 6 months to apply after the baby is born
  • Sending people a text message when their application is received

It is continuing to work with the Experience Panel and other user groups who will use and deliver the system, including asking people to help test the new application process. If you would like to be involved in this work contact

View the research results in full


Anyone affected by the two child limit in its first year of operation will have received a final decision around 31 July 2018, which confirms their entitlement for the tax year 2017/18.

Claimants who became responsible for a child born on or after 6 April 2017 and are not receiving a child element for that child can request a mandatory reconsideration of that decision, and subsequently lodge an appeal.

In any case, this can be done with a request that the appeal is sisted behind SC & Ors v SSWP [2018] EWHC 864 (Admin) Case No: CO/3806/2017; the wider challenge to the two child limit on human rights grounds for which permission has been granted to appeal to the Court of Appeal. See our test case pages for more information and a template.

In cases where a child element is not payable for a new baby because an older child or children in the household are adopted or in a non-parental caring arrangement, the government has accepted the High Court’s finding that the ‘ordering rule’ for an exception in this situation is perverse and unlawful (para 215). A necessary amendment to the tax credits legislation is still awaited, and we have asked HMRC to contact those affected.

However, to safeguard maximum backdating of the child element to the child’s date of birth, it is advisable to request a mandatory reconsideration/lodge an appeal against the final decision on the grounds that it is wrong on the basis of the court judgment given on 20 April 2018, which is the law that applied when the decision was made around 31 July 2018.


This section summarises recent decisions of the Upper Tribunal; these set a binding precedent on HMRC or DWP decision-makers and First–tier Tribunals in similar cases.

Living together as husband and wife

This case concerned an unmarried couple who had separated, and then resumed living under the same roof while separated. The claimant had lived at two separate addresses with the same man. They had had a child together. There was evidence from credit reference companies that their financial affairs were to some extent intertwined. HMRC decided that she was not entitled as a single person because ‘they were residing in the same household…have not taken steps to show you are separated on a permanent basis …and appear to be living as a family unit… financially jointly running the household ….’

Judge Wikeley’s findings included:

  • HMRC’s decision was confusingly treating part of the test that applied to married couples (‘neither separated under a court order or in circumstances in which the separation is likely to be permanent’) as relevant to the test for unmarried couples.
  • The correct test for unmarried couples is whether they are living together as husband and wife, considering the six “signposts” approved in caselaw i.e. membership of the same household, stability, financial support, sexual relationship, children and public acknowledgement.
  • It is not necessarily enough to ask: are they living together? In order to decide whether they are living together as husband and wife, one must also ask: if they are living together, why are they living together?

In this case, he was satisfied that they had resumed living together for reasons which were not consistent with living together as husband and wife. The decision was re-made so that the claimant was entitled to tax credits as a single person.

Read the decision in full: EM v HMRC: [2018] UKUT 220 (AAC)


Q: My client is a lone parent working 16 hours a week at the minimum wage and gets working tax credit. Her children have been getting free school meals for the past few years because her income was below £6,420. However as the minimum wage is now £7.83, she expects to earn £6,514.56 in 2018/19. Is she still entitled to free school meals?

A: Yes. In Scotland, eligibility for free school meals includes people entitled to child tax credit and working tax credit if the award is based on the ‘relevant income’ not exceeding the income threshold (£6,420) for working tax credit. The ‘relevant income’ for tax credits is the previous year income (2017/18), unless income rises by more than £2,500.

But many local authorities simply ask for current income, so there is a risk she could be refused free school meals.

If the eligibility rules are not changed to reflect the increase in the minimum wage, she would not be entitled from 6 April 2019.

The rule about relevant income not exceeding £6,420 also applies to the free childcare place for two year olds. Note that once a child has started in childcare, the place is not lost if the qualifying benefit stops.