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

Tax credits and early years e-bulletin March 2019

22 March 2019

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The following factsheets on financial help for families have been updated and are available to download from our website:

We have a limited printed supply of some of the most popular factsheets. If you would like to receive printed copies please email



The Best Start grant - pregnancy and baby payment has been available to low income families in Scotland since the end of last year. More than 7,000 payments have already been made, totaling £2.7 million as of 31 January 2019.

From 25 March 2019, the following changes have been made:

  • Ensuring that an individual who has already received a Sure Start Maternity Grant is not entitled to a Best Start Grant pregnancy and baby payment for the same child.
  • Adding receipt of pension credit child element to show responsibility for a child.
  • Allowing a BSG to be awarded without a new application if a previous application was refused due to an official error.
  • Allowing a BSG to be awarded where a qualifying benefit has been awarded on appeal to include the date of application.
  • Ensuring that where a second grant may be payable following a change of responsibility, the child is not living with the person who has already received a payment.

View the amending regulations.

Further changes that will bring the early education and school age payments into force are expected soon. Read the article in our latest Welfare Rights Bulletin and check our online resource on Scottish benefits to keep up to date.



Following the Autumn statement 2016 exercise to correct child tax credit awards where the disabled child element was missing, HMRC recently made the following statement:

“We have identified that two groups were not picked up by that exercise. These consist of cases:

  1. where the claimant had informed HMRC of their eligibility for the disability element before the correction exercise was run but had done so more than one month after being informed by DWP of the decision to award DLA; and
  2. where the rate of DLA in payment was changed.

In the former case the standard one month backdating had been applied.

In the case of the latter group HMRC plans to adjust the awards from 2016/17 to align with the Autumn Statement 2016 correction exercise. In the case of the former group, HMRC plans to adjust the awards from 6 April 2016, or from the date DLA was awarded, to the date from which the disability element was paid in order to make up any shortfall in backdating.

Where necessary, HMRC Commissioners have agreed to the use of discretionary powers, provided in the Commissioners for Revenue and Customs Act 2005, to pay these groups of customers. These powers are restricted to exceptional cases. This is because HMRC recognises that they should have been included in the 2016 correction exercise.

We intend to run a scan to identify eligible individuals so that we can adjust their awards accordingly. We estimate that around 5,000 to 10,000 customers are likely to be affected. “

CPAG is also involved in a test case for related cases.



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.

This case considered whether a total of £16,000 paid in instalments to a tax credits claimant by his ex-employer should be treated as employment income or capital. An original agreement was reached to the effect that the employer would, without admission of liability, pay the claimant £16,000 in return for an employment claim being withdrawn. However, a subsequent agreement was reached for the employer to pay the claimant salary payments for a year and employ the claimant on a fixed term contract with the various payments to be made by instalments. In essence, the First-tier Tribunal found that the claimant was still due to receive a total of £16,000 but on very different terms, under which the instalments were employment income. The Upper Tribunal Judge confirmed that this was correct and the payment therefore counted for the purposes of tax credits.

Read the decision in full: AH v HMRC (TC) [2019] UKUT 5 (AAC)



What is the difference between the ‘main responsibility’ test for children in child tax credit and universal credit?

For both child tax credit and universal credit, to be responsible for a child, the claimant must be ‘normally living with’ the child. However, in shared care arrangements, for example following separation of parents, the child may be normally living in two (or more) households.

For child tax credit, there is a further test to decide who has ‘main responsibility’ for the child, but this is only considered if two (or more) competing claims are made for the same child.

For universal credit, the further test to decide who has ‘main responsibility’ is applied where the child is normally living in two (or more) households, regardless of whether more than one person has tried to claim for the same child.

In both cases, the people who share care for the child can agree between them who claims, but for universal credit the DWP decision maker may decide otherwise if s/he thinks the agreement does not reflect the actual arrangements.

The main responsibility test in either case considers a range of factors, and is not dependent on who gets child benefit for the child (see this Welfare Rights Bulletin article for more information about this for universal credit).