Tax credits and early years ebulletin December 2021

13 December 2021
December 2021


• Post Office card accounts extended
• Free childcare place
• Free school meals
• Scottish child payment bridging payments
• Child disability payment
Transfer to universal credit: compensation for loss of tax credits
Post Office card accounts extended

The use of Post Office card accounts for benefit payments is ending. HMRC has announced that it will continue to make payments of child benefit and tax credits into Post Office card accounts until 5 April 2022. It had previously announced that payments would stop at the end of November 2021, but has arranged an extension with the Post Office for payments to continue. Around 13,000 claimants receive payments into Post Office card accounts. HMRC is encouraging those claimants to open a bank, building society or credit union account, and notify the details as soon as possible.

Note that the Department for Work & Pensions (DWP) has extended the payment of the benefits it administers (such as universal credit or personal independence payment) to November 2022.

Free childcare place

A free childcare place is available for 2 year olds in households receiving certain benefits. The income limits increased from 30 September 2021 as follows:

• universal credit and monthly net earnings no more than £625 (previously £610)

• working tax credit and annual gross income for tax credits purposes no more than £7,500 (previously £7,320)

The income limit applies in the monthly assessment period before the application for the childcare place. Once the free childcare place is provided, the child remains entitled even if there is a change to income or benefits. View the amendment here.

Free childcare expanded in August 2021 from 600 hours to 1,140 hours a year (about 30 hours a week in term-time)

The expanded free childcare place is also available to all 3 and 4 year olds, regardless of income or benefits. See Parent Club for more information.

Free school meals

Free school meals in Scotland are available for all children in Primary 1 to 4, and are being extended to all children in Primary 5 from January 2022. This entitlement is regardless of income or benefits.

For older children, entitlement to free school meals depends on being in a low income household, in receipt of one of the following benefits:

• Universal credit and earning no more than £625 in the monthly assessment period before applying.

• CTC only with annual income under £16,480

• CTC/WTC with annual income under £7,500

• Income support

• Income-based jobseeker’s allowance

• Income-related employment and support allowance

• Asylum support from the Home Office

It is understood that children in families in receipt of pension credit including child elements will also be entitled to free school meals. Children in families with no recourse to public funds due to immigration status and on a low income may also qualify on a discretionary basis.

Families with children in P1-4 (and P5 from January) who meet the low income criteria should still apply for free school meals (and clothing grant) in order to receive additional payments which have been made automatically during the pandemic. The final payment for 2021 is a winter payment of £160 (minimum) to be paid in December. The low income criteria for free school meals will also be used for Scottish child payment bridging payments in 2022 (see below).

Scottish child payment bridging payments

The Scottish child payment is currently only available to children under 6 in lower income families, but will be extended to children under 16 by the end of 2022. The Scottish government has announced four bridging payments of £130 to be made at the start of the school holidays in Easter, summer, October and Christmas 2022. These payments bring together the covid winter hardship payments and family pandemic payments made over the past year, and will be made automatically by local authorities to families of children entitled to free school meals due to low income.

Note that these payments are targeted on the lowest incomes, for families entitled to universal credit or tax credits with earnings below a set limit, while the Scottish child payment is more widely available to families entitled to any universal credit or tax credit, regardless of level of earnings.

Child disability payment

From 22 November 2021, child disability payment (CDP) is being introduced in Scotland, replacing disability living allowance (DLA) for new claims. Families with children already getting DLA will continue to receive their payments and do not need to do anything at present. Entitlement to CDP means an additional disabled child element is payable in child tax credit or universal credit, and if CDP is payable at the highest rate for care, the higher rate for a severely disabled child is payable in child tax credit or universal credit. It is important for the claimant to notify HMRC or DWP that CDP is in payment, and not rely on data-sharing between Social Security Scotland and these agencies.

More information on child disability payment here.

Transfer to universal credit: compensation for loss of tax credits

The Independent Case Examiner (ICE) investigates complaints about the Department for Work & Pensions. In their latest report, they reviewed a complaint (Case Study 1) in which a tax credits claimant lost entitlement to tax credits following DWP advice to claim universal credit. The claimants had called the ESA claim line and asked to claim ESA, but were misdirected to claim UC. They claimed UC online and declared savings of more than £16,000 – as a result child tax credit was stopped but they were not entitled to UC. They were then advised to claim ESA – which was what the claimant had asked to claim in the first place. The ICE recommended the claimant be awarded ongoing loss of statutory entitlement to CTC until their child reached 18 or until their CTC claim would have naturally migrated to UC as part of managed migration.