Tax credits and early years e-bulletin June 2019 | CPAG

Tax credits and early years e-bulletin June 2019

22 June 2019
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The Best Start Grant is a package of three payments available to young parents and lower income families in Scotland at different stages from pregnancy to school age:

  • The pregnancy and baby payment has been available since 10 December 2018;
  • The early learning payment is now available – introduced from 29 April 2019. It is payable to people responsible for a child aged from 2 to 3½;
  • The school age payment is available from 3 June 2019, for people responsible for a child born from 1 March 2014 to 28 February 2015 inclusive.

Best Start grant claims can be made:

  • online;
  • by calling 0800 182 2222 (freephone, 8am to 6pm, Monday to Friday);
  • via the contactSCOTLAND app for British Sign Language users;
  • By filling in a paper form available to download online or on request.

View the legislation introducing the early learning and school age payments.

Check our online resource on Scottish benefits to keep up to date.




In Scotland, all P1-3 pupils are entitled to free school meals – no need to apply. For other pupils, the parent or carer must be getting one of the following:

  • income support
  • income based jobseekers allowance
  • income related employment and support allowance
  • child tax credit (CTC) only and income less than £16,105
  • CTC and working tax credit (WTC) and income less than £6,420 (£6,900 from 1 August 2019)
  • universal credit and earning no more than £610 a month
  • Home Office support for asylum seeker

From 1 August 2019, the income limit to qualify for free school meals in Scotland if entitled to WTC is increasing from £6,420 to £6,900 a year. This allows lone parents and some couples working 16 hours a week at the minimum wage to continue to qualify for free school meals via WTC. The minimum wage for those aged at least 25 is £8.21 an hour since April 2019, so 16 hours a week works out as around £6,830 a year. Income is as used for tax credits purposes, which is based on the previous tax year, unless income changes in the current year by more than £2,500.

However, pension credit has not yet been added as a qualifying benefit in Scotland. Most older people responsible for children may still qualify through CTC. However, those who become responsible for a child or made new claims since 1 February 2019 receive a child element in pension credit instead, and should ask the local authority to use its discretion under the Education (Scotland) Act to award free school meals in this case.

View the amending regulation.


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.

Self-employment and decision-making

Two cases have considered the definition of self-employment for WTC (engaged in carrying on a trade, profession or vocation, which is organised and regular, on a commercial basis, with a view to realisation of profits) and also raised some issues with the decision making process and appeals.


The first case concerned renewal of working tax credit (WTC) by a claimant who developed and sold computer games. He had been in receipt of WTC for the previous tax year, for which he had reported household income of £845. HMRC asked the claimant to provide further information and evidence about his business at the start of the new tax year, before a decision was made. The claimant asserted that he provided further evidence, which was not received by HMRC, and further requests were not responded to. HMRC decided that he was not entitled to WTC for that year. The claimant appealed against this decision, but did not provide any further evidence and did not request a hearing, despite being offered a further opportunity by the tribunal do so. The First-tier Tribunal dismissed the appeal, finding that his self-employment was not done for payment or in expectation of payment. The Upper Tribunal Judge found that this decision was flawed because it had failed to distinguish between income and turnover, and made inadequate findings of fact, but also dismissed the appeal due to the claimant’s unwillingness to engage with the appeal process.

The second case concerned renewal of working tax credit (WTC) by a self-employed author, musician, publisher and promoter, who was sole trader in the name of Cosmos Original Productions, working on average 11 hours a day and had written 20 books and recorded 18 albums. He had been in receipt of WTC since 2006, and provided evidence showing profits of approximately £8.44 a week. HMRC originally awarded the claimant WTC for the tax year, but later made a further decision that he was not entitled for the whole of that tax year because he did not meet the definition of self-employed because his business was not considered to be commercial. The First-tier Tribunal found that the claimant’s trade was organised and regular, with a view to the realisation of profits, but decided he mot meet the full definition because his activities are not commercial in the sense that they are quite unprofitable, and his work could not be described as genuine and effective. The Upper Tribunal Judge held that this was an error of law for a number of reasons, including:

  • There is no requirement of actual profitability. Rather there must be a view to profits;
  • No minimum income provision was made in the amended definition for WTC (unlike universal credit);
  • “Commercial” is about buying and selling exchanges, not profitability;
  • The words “genuine and effective” are not used in the definition of self-employment for WTC.

Decision making and appeals

In the first case, HMRC had originally argued that the appeal should lapse because it was made against the initial decision (under section 14 of the Tax Credits Act), while a final decision (under section 18) had been made at the end of the tax year (as established by LS & RS v HMRC [2017] UKUT 257 (AAC). The Judge notes that a section 18 decision can only be made where a tax credit has been awarded for the whole or part of the year, so this could not apply. HMRC accepted this and conceded that its practice of awarding tax credit for one day in these cases was a workaround of its computer system, on an extra-statutory basis rather than reflecting a positive decision.

In the second case, tax credits had been awarded in the initial decision (section 14) but the appeal was against a revision decision made during the tax year (under section 16) that the claimant was never entitled. This was followed by a final decision at the end of the tax year (under section 18). The Judge found that the section 16 decision was no longer operative (following LS & RS) but not referring to the first of these cases. The claimant had also requested a review of the final decision, and the Judge recommended that the findings in this judgment should be considered by HMRC when carrying out that review.

Read the decisions in full:

C v HMRC (TC): [2019] UKUT 69 (AAC)

JW v HMRC: [2019] UKUT 114 (AAC)

Whether a school or college has to be registered or approved

This case concerned a young person attending a course at a Talmudical College which was a registered charity but had ceased to be a school registered with the Department of Education. The law states that education counts if it is at a school or college, or if receiving that education prior to the age of 16, elsewhere if approved by HMRC. The claimant produced HMRC guidance which referred to a young person undertaking religious studies and stated that studying at a Yeshiva (a Jewish religious institution for the study of Torah and Talmud) in the UK should be accepted as non-advanced education. The parties agreed that the college met this definition and had been approved by HMRC by way of this guidance.

Read the decision in full: JL v HMRC (TC): [2019] UKUT 94 (AAC)

Married couple and separation: cultural issues

This case concerned a claim for tax credits by a married woman as a single person on the basis that she was separated from her husband in circumstances which were likely to be permanent. She remained in contact with her husband due to family pressures and kept up a public appearance of a happy marriage for cultural reasons. The husband did not attend the hearing or give any evidence, from which the First-tier Tribunal inferred that he did not support her appeal. The Judge notes that she had been presented with a Catch-22: if she persuaded her husband to attend the hearing, it could be said that their relationship could not have broken down, but if she was unable to persuade him to attend, then the inference was that he did not support the facts as presented by his wife. The Judge set aside the decision for a new First-tier Tribunal, and stressed the importance of interpreting evidence about an alleged separation with an awareness of its cultural context.

Read the decision in full: UA v HMRC (TC): [2019] UKUT 113 (AAC)

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