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Backgrounds and Definitions: Private tax credit finalised award statistics – Small space knowledge 2020 to 2021

Income Statistics 2019 to 2020: Summary for Tables 3.12 to 3.15a

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1. A Nationwide Statistics Publication

Nationwide Statistics are produced to excessive skilled requirements as set out within the Code of Observe for Official Statistics. They endure common high quality assurance opinions to make sure they meet buyer wants and are produced free from any political interference.

The UK Statistics Authority has designed these statistics as Nationwide Statistics, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Observe for Official Statistics

Designation could be broadly interpreted to imply that the statistics:

meet recognized person wants
are effectively defined and readily accessible
are produced in keeping with sound strategies
are managed impartially and objectively within the public curiosity
are produced to the very best normal, guaranteeing that knowledge confidentiality has been maintained

As soon as statistics have been designed as Nationwide statistics it’s a statutory requirement that the Code of Observe shall proceed to be noticed.

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You can too discover Nationwide Statistics on the web at www.statistics.gov.uk

2. Introduction

These statistics concentrate on the variety of households benefiting from tax credit in England, Scotland, Wales and Northern Eire as at 31 August 2020. They’re primarily based on a snapshot of the 2020 to 2021 finalised award knowledge, which in flip relies on 100% of tax credit score administrative knowledge obtainable for that interval, and so they don’t seem to be topic to sampling error. Inside England, Wales and Northern Eire, the variety of households and kids are damaged down by Decrease Tremendous Output Space (LSOA), and inside Scotland they’re damaged down by Scottish Information Zone. This publication excludes any instances the place the claimants dwell exterior the UK or the place we can not find a area or space.

3. Definitions

3.1 What are tax credit?

Tax credit are a versatile system of monetary assist designed to ship assist as and when a household wants it, tailor-made to their particular circumstances. Launched in 2003, the system kinds a part of wider authorities coverage to offer assist to folks returning to work, scale back little one poverty and enhance monetary assist for households. The system is designed flexibly in order that as households’ circumstances change, (every day) entitlement to tax credit can change. Tax credit can reply rapidly to households’ altering circumstances offering assist to people who want it most.

Tax credit are primarily based on family circumstances and could be claimed collectively by members of a pair, or by singles. Entitlement relies on the next elements:

hours labored
quantity and age of kids

For additional details about who can declare please check with the HMRC web site

Tax credit are made up of working tax credit score and little one tax credit score, defined beneath.

3.2 Working Tax Credit score (WTC)

Gives in-work assist for folks on low incomes, with or with out youngsters. It’s obtainable for in-work assist to people who find themselves aged at the very least 16 and:

are single, work 16 or extra hours per week and are accountable for a kid or younger individual
are in a pair accountable for a kid or younger individual the place their mixed weekly working hours are at the very least 24, with one mum or dad working at the very least 16 hours
work 16 or extra hours per week and are receiving or have lately acquired a qualifying illness or incapacity associated profit and have a incapacity that places them at a drawback of getting a job
work 16 or extra hours per week and are aged 60 or over

In any other case, it’s obtainable for people who find themselves aged 25 and over who work 30 hours per week or extra.

WTC is made up of the next parts:

Primary ingredient: which is paid to any working one that meets the fundamental eligibility circumstances.

Lone Father or mother ingredient: for lone dad and mom

Second grownup ingredient: for {couples}

30 hour ingredient: for people who work at the very least 30 hours per week, {couples} the place one individual works at the very least 30 hours per week or {couples} who’ve a baby and work a complete of 30 hours or extra per week between them the place one among them works at the very least 16 hours per week.

Incapacity ingredient: for individuals who work at the very least 16 hours per week and who’ve a incapacity that places them at a drawback in getting a job and who’re receiving or have lately acquired a qualifying illness or incapacity associated profit.

Extreme incapacity ingredient: for people who find themselves in receipt of DLA (Highest Charge Care Element), PIP (Enhanced Each day Residing Element) or Attendance Allowance on the highest charge.

Childcare ingredient: for a single mum or dad who works at the very least 16 hours per week, or {couples} who both (i) each work at the very least 16 hours per week or (ii) one among them work at the very least 16 hours per week however the different is out of labor for being in hospital or in jail and who spends cash on a registered or authorised childcare supplier. The childcare ingredient of WTC can assist as much as 70% of childcare prices as much as sure most limits.

Additional info could be discovered right here on childcare value assist

Tapering: is the quantity of the award that will likely be lowered when the family revenue exceeds a given threshold. For instance, the revenue threshold for claimants receiving WTC solely and for mixed WTC and CTC claimants is £6,530. After this threshold, the taper charge will likely be 41%. Tapering reduces WTC first after which CTC for claimants who obtain each.

3.3 Baby Tax Credit score (CTC)

Gives income-related assist for youngsters and qualifying younger folks aged 16 to 19 who’re in full time, non-advanced schooling or authorised coaching right into a single tax credit score, payable to the principle carer. Households can declare CTC whether or not or not the adults are in work.

CTC is made up of the next parts:

Household ingredient: which is the fundamental ingredient for households accountable for a number of youngsters or qualifying younger folks.

Baby ingredient: which is paid for every little one or qualifying younger individual the claimant is accountable for. From April 2017, this ingredient is not payable in respect of the third or subsequent youngsters who had been born after this date. Sure exceptions to this rule apply and are set out on the CTC exceptions to the two little one restrict web page on GOV.UK

Incapacity ingredient: for every little one or qualifying younger individual the claimant is accountable for if Incapacity Residing Allowance (DLA) or Private Independence Fee (PIP) is payable for the kid, or if the kid is licensed as blind or severely sight impaired.

Extreme incapacity ingredient: for every little one or qualifying younger individual the claimant is accountable for if DLA (Highest Charge Care Element) or PIP (Enhanced Each day Residing Element) is payable for the kid.

Out-of-work profit households: some out-of-work households with youngsters don’t obtain CTC however as a substitute obtain the equal quantity through little one and associated allowances in Earnings Assist or income-based Jobseeker’s Allowance (IS/JSA). These households are included within the figures, typically along with out-of-work households receiving CTC. The overwhelming majority of those claimants have now moved to tax credit and the rest will likely be migrated both to tax credit or Common Credit score.

4. Baby and Working Tax Credit score entitlement

The quantity of assist an eligible household can obtain (often called their entitlement) varies relying on their revenue and their eligibility for particular tax credit score parts. First, a household’s most attainable entitlement is labored out by including up all of the completely different parts of CTC and WTC that they’re eligible for.

A family’s precise entitlement is then decided by tapering this most quantity in keeping with completely different thresholds. As demonstrated throughout the diagram beneath, households eligible for the WTC obtain the total entitlement till their annual family revenue reaches £6,530, after which the quantity of tax credit they obtain is lowered by 41 pence for every £1 they earn past this threshold.

If a family is out-of-work and due to this fact eligible for the CTC solely, they may obtain the total entitlement till their annual family revenue reaches £16,385 (2020 to 2021). After this level, the quantity of tax credit they obtain is once more lowered by 41 pence for every extra £1 of revenue past this threshold (observe that this isn’t proven on the diagram beneath).

Due to the vary of attainable eligibilities and interactions between the weather, each the utmost award and the form of the above award profile will likely be completely different for each household with completely different circumstances.

Tax credit are primarily based on the taxable revenue of adults throughout the household. The revenue used to calculate the award relies on the households’ revenue from the earlier tax 12 months, or on their most lately reported circumstances in-year. As much as £2,500 of any change in annual revenue between the earlier or present 12 months is disregarded within the calculation.

A household’s tax credit award is provisional till finalised on the finish of the 12 months, when it’s checked towards their ultimate revenue for the 12 months. This publication pertains to a snapshot of tax credit score assist primarily based on provisional incomes and different circumstances as reported on the date when the statistics had been extracted.

5. Technical notes

5.1 What the publication tells us

The small space knowledge is presently revealed throughout summer season round one 12 months following completion of the entitlement 12 months in query. The delay in publication is the results of the finalisation course of constructed into the Tax Credit system in addition to the time taken to provide and high quality guarantee the statistics. Most households have till July 31 following the top of the entitlement 12 months to resume their award reporting their finalised revenue for the 12 months in query.

Nevertheless, households that report revenue from Self-Evaluation (e.g., the self-employed) have till January 31 of the next 12 months to finalise their revenue. Consequently, the total image is just not recognized till at the very least February the 12 months after the entitlement 12 months ends. The 2020 small space knowledge relies on the 2020 to 2021 finalised awards knowledge, however solely awards dwell as at 31 August 2020 are chosen for inclusion on this publication, due to this fact the estimates on this publication is not going to match precisely with the estimates from the 2020 to 2021 Finalised Annual Awards publication

This sequence has been produced yearly since 2005.

Awards knowledge dwell as at 31 August 2020 are used with the intention to align this publication with the Baby Profit: small space statistics: August 2020 publication.

5.2 LSOAs and Information Zones:

The usual geography used to report small space knowledge in England, Wales and Northern Eire is the LSOA. These are first constructed from teams of Output Areas used within the 2001 Census, and have been up to date following the 2011 census. LSOAs are maintained as a part of the 2011 Census Output Space (OA) upkeep and are break up or merged the place they breach predefined inhabitants and family thresholds. Due to this fact, LSOA boundaries could change from year-to-year.

Equally, for Scotland the important thing small space geography is known as the Information Zone and as with LSOA’s in England and Wales they nest inside Native Authority boundaries. Extra info could be discovered on the Scottish Neighbourhood Statistics web site

5.3 31 August 2020 reference date:

CTC and WTC are awards for tax years, however the entitlement stage can differ over the 12 months as households’ circumstances change. These tables are primarily based on households’ entitlements at 31 August 2020, given the household measurement, hours labored, childcare prices and disabilities at that date, and their 2020 to 2021 incomes.

This date was chosen as a result of it’s the reference date for revealed Baby Profit (CB) statistics for England and Wales, at LSOA stage and for Scotland at Information Zone stage. At this date most younger folks aged 16 had been nonetheless qualifying for CB and CTC, though traditionally their numbers drop barely over the interval since Could (usually one or two %), that is primarily by means of them taking over everlasting work.
In the course of the faculty vacation some households not use childcare prices, whereas others take up childcare. Relying on how these prices are calculated for the declare, this may increasingly have an effect on which households benefited from the childcare ingredient at 31 August 2020.

5.4 Addresses used for geographical allocation:

To keep up comparability, the place households seem in each the tax credit and Baby Profit knowledge, they’re allotted to the identical LSOAs (that are created primarily based on 2011 census) in each small space knowledge publications. Nevertheless, the revealed Baby Profit statistics for Information Zones in Scotland was primarily based on 2001 census geography.

5.5 Current coverage modifications

Within the 2015 Summer season Funds, the Authorities introduced that the kid ingredient of CTC could be restricted to 2 youngsters for these born on or after 6 April 2017 until sure exceptions apply. Prior to six April 2017, the kid ingredient of CTC was paid for every little one or qualifying younger individual that the claimant (or his or her companion) was accountable for.

The change signifies that any household with two or extra present youngsters don’t obtain any little one ingredient (price as much as £2,830 a 12 months per little one in 2020 to 2021) for youngsters born on or after that date, topic to exceptions. The kid ingredient of CTC continues to be paid for all youngsters born earlier than 6 April 2017.

As well as, any household having their first little one born on or after 6 April 2017 don’t obtain the household ingredient (price as much as £545 a 12 months) of CTC. The household ingredient was beforehand paid to all households. From 6 April 2017, it is just be paid the place the claimant is accountable for at the very least one little one or qualifying younger individual born earlier than 6 April 2017.
For additional info, please go to the CTC exceptions to the two little one restrict web page on GOV.UK.

Statistics associated to this coverage could be discovered on the Official Statistics web page on GOV.UK.

5.6 Common Credit score

Common Credit score (UC) is a fee to assist with residing prices for these on a low revenue or out of labor. UC was launched in April 2013 in sure areas of North West England. Since October 2013, it has progressively been rolled out to different areas.

Claimants obtain a single month-to-month family fee, paid right into a checking account in the identical means as a month-to-month wage and assist for housing prices, youngsters and childcare prices are built-in into UC.

CTC will likely be changed as UC rolls out. Since January 2019 there have been no new tax credit score claims (excluding a small variety of households claiming the household premium).

Additional details about UC, together with making a declare, is offered on-line on the UC web page on GOV.UK.

Statistics associated to UC can be found on-line and could be discovered right here on the UC statistics web page on GOV.UK.

5.7 Person Engagement

Bespoke evaluation of tax credit knowledge is feasible though there could also be a cost relying on the extent of complexity and the sources required to provide. If you want to debate your necessities, to touch upon the present publications, or for additional details about the tax credit statistics please use the contact info on the finish of this publication, or from the Statistics at HMRC web page.

We’re dedicated to enhancing the official statistics we publish. We wish to encourage and promote person engagement, so we will enhance our statistical outputs.

We might welcome any views you may have through the use of this suggestions type hyperlink. We’ll undertake to overview person feedback on a quarterly foundation and use this info to affect the event of our official statistics. We’ll summarise and publish person feedback at common intervals.

5.8 Person Notification

As talked about within the earlier publication, the Baby Profit Statistics have been faraway from this publication as these statistics can be found on the Baby Profit statistics web page.

6. Revision coverage

This coverage has been developed in accordance with the UK Statistics Authority Code of Observe for Official statistics and HM Income and Customs Revisions Coverage.

There are two kinds of revisions:

Scheduled revisions

This requires rationalization of the dealing with of scheduled revisions because of the receipt of up to date info within the case of every statistical publication. As this publication relies on finalised awards knowledge, the figures introduced on this publication are handled as ultimate.

Unscheduled revision

HMRC goals to keep away from the necessity for unscheduled revisions to publications until they’re completely crucial and put methods and processes in place to minimise the variety of revisions. The place revisions is critical as a result of errors within the statistical course of, an evidence together with the character and extent of revision can also be offered. Additionally, the statistical launch and the accompanying tables will likely be up to date and revealed as quickly as is sensible.

7. Disclosure management

To keep away from the attainable disclosure of details about particular person households, values have been supressed when underlying counts are low. An entry of ‘low’ in a desk signifies that the info has been rounded all the way down to 0 or has been withheld consistent with HMRC’s Dominance and Disclosure coverage.

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