You are entitled to the basic element of WTC if you are engaged in qualifying remunerative work, and are not in one of the excluded groups listed below. This means that you must:

• be working at the date of claim, or have accepted an offer of work which you expect to start within seven days of claiming;
• fulfil certain age qualifications and be working for a minimum number of hours per week (see below);
• expect to continue working for at least four weeks after making your claim, or after the job starts;
• do the work 'for payment or in expectation of payment' (see below).

Even if you satisfy all those conditions, you still cannot be regarded as being in qualifying remunerative work if you are:

• a charity worker, and the only payment you receive is reimbursement of expenses;
• a respite carer using the Rent a Room scheme for income tax (see below for details);
• a trainee, engaged on a scheme for which a training allowance is being paid;
• participating in the Intensive Activity Period or Preparation for Employment (Northern Ireland) Programme under the relevant Jobseekers Allowance Regulations;
• in receipt of a sports award, and you are not receiving or expecting any other payment;
• taking part in an employment zone programme and receiving no payment apart from a discretionary payment from the employment zone contractor, or training premiums.
• serving a custodial sentence or remanded in custody awaiting trial, and you are engaged in work (whether inside or outside a prison) while you are serving the sentence or remanded in custody.

'Test-trading'

Participants in the DWP initiative New Deal self-employment route who are 'test-trading' are regarded as in remunerative work from the date they commence 'test-trading' or the date they start to undertake the required number of hours, if later.

Foster carers and adult placement carers

Foster carers and adult placement carers are considered to be in qualifying remunerative work and therefore entitled to WTC.

The Revenue instructions tell officers to accept the number of working hours declared on the claim form. This is despite the fact that arrangements applying to both sectors from 2003-04 onwards mean that the vast majority of carers are treated as having no profit and no loss for income tax purposes.

However, respite carers who care for a person who is not a member of their household, and whose payment from the local authority (or voluntary organisation or primary care trust) is exempt from income tax under the Rent a Room scheme, are not able to count their caring activities as qualifying remunerative work for WTC purposes. Similarly, foster carers and adult placement carers who opt for the Rent a Room scheme are not treated as being in qualifying remunerative work.

Requirements as to age and hours of work

To fulfil the requirements as to age and hours of work, you must work at least 16 hours a week if you are:

• a couple with children,
• a lone parent,
• a person over 50 years of age returning to work after a period of unemployment, or
• a person with a disability which puts you at a disadvantage in getting a job,

and you are at least 16 years of age.

Otherwise you must work at least 30 hours a week, and be at least 25 years of age, to be entitled to WTC.

If you are a couple without children making a joint claim, only one of you need be aged at least 25 and working for at least 30 hours a week in order to qualify.

Seven day run-on after finishing work

Provided you have satisfied all the above conditions, you will be treated as continuing to satisfy them for seven days after finishing work. This is to allow for intervals of up to seven days between jobs to be ignored.

4 week run-on

From 6th April 2007, if you have been working for not less than 16 or 30 hours a week, and you either drop your working hours to below 16 a week or stop working altogether, you will be treated as continuing to work for the four weeks immediately afterwards. Thus your WTC entitlement will continue during those four weeks after you have finished work, or reduced your hours.

Note that the 4 week run on does not apply to those who qualify for WTC because they work more than 30 hours a week and their working hours fall to below 30 but more than 16 hours a week.

How to determine number of hours worked

If you are an employee or an apprentice, you are usually treated as working the number of hours you normally perform under your contract of employment or apprenticeship. This may not necessarily be the same number of hours as originally set out in your contract.

If you are self-employed, you are treated as working for the number of hours you 'normally perform for payment or in expectation of payment'. This includes both work done and billed to the customer, and the time spent in 'activities necessary to the employment'.

These are some other points to bear in mind when determining how many hours are worked.

• Any period of customary or paid holiday is disregarded, so that entitlement to WTC is not interrupted.




• Time allowed for meals and refreshments is treated as time spent working if you are or expect to be paid for that time.

• 'Hospital or clinic visits for the purpose only of treating or monitoring [your] disability' are treated as time spent working if you are or expect to be paid for that time.




• If you have a 'recognisable cycle of work' over a year which includes periods of vacation etc when you do not work, those periods are ignored and your WTC entitlement is not interrupted.

  Your hours are averaged over the whole year to determine whether you usually work 16 hours or 30. This will apply to you if, for instance, if you are a term-time worker in a school or college.

  Seasonal workers, and others who work over a recognisable cycle of less than a year, will have their weekly hours averaged out over the cycle, and will be able to claim WTC during the whole of the cycle but not for periods outside it (unless they then do other work).

If you are an agency worker, you normally work the number of hours in respect of which remuneration is normally paid to you by an employment agency with whom you have a contract of employment. If in fact your working hours fluctuate from week to week and you have no pattern by which you can determine any normal working routine, it may be difficult if not impossible to determine what are your normal working hours.

We discuss the problems this causes in the section on Overpayments & Underpayments and explain the circumstances.

If there is any dispute about what was said, the Revenue should keep tape recordings of all calls to the helpline and can check if you tell them the date and approximate time of day when you called. However, we have had correspondence from the Data Protection Unit indicating that in the past not all calls to the helpline have been recorded. (See our earlier article on this.)

This also applies if you are in receipt of short-term incapacity benefit at the lower rate, income support on grounds of incapacity to work, or national insurance credits on grounds of incapacity to work.

You are entitled to the disability element of WTC if you or your partner:

• are aged at least 16;
• work for at least 16 hours a week; and
• have a 'physical or mental disability which puts [you] at a disadvantage in getting a job' (this is further explained below); and
• satisfy one of a number of conditions of social security benefits related to your disability (see below), or qualify under the so-called 'fast track' rules.

To satisfy the disability benefit condition you must:

Receive (or have for at least one day in the 182 days preceding your claim received) higher rate short term or long term incapacity benefit or severe disablement allowance; or
• Receive (or have for at least one day in the 182 days preceding your claim received) higher pensioner or disability premium in income support, income-based jobseeker's allowance, housing benefit or council tax benefit; or
• Be in receipt of disability living allowance, attendance allowance or mobility supplement (if your DLA, AA or mobility supplement stops your disability element will cease immediately);
• Have an invalid carriage or another vehicle provided under the Invalid Vehicle Scheme; or
• Have been entitled to the disability element of WTC itself at any time in the 56 days prior to your claim (except if you received the disability element by virtue of getting DLA or AA).or
• Have engaged on certain approved training programmes for 16 hours or more a week, you may qualify for the disability element if you are receiving short-term incapacity benefit at the higher rate, long-term incapacity benefit, or severe disablement allowance.

The disability element, and its predecessor the disabled person's tax credit, were intended to help people into work, and originally it was not possible to claim it if you became sick or disabled while in work. That is now possible, but the requirements are generally criticised as too stringent and bureaucratic. They are:

• you must have received statutory sick pay, occupational sick pay, short-term incapacity benefit at the lower rate or income support for 140 days (20 weeks), or been credited with Class 1 or 2 national insurance contributions for 20 weeks,
• your disability must be expected to last at least 6 months, or for the rest of your life if you are not expected to survive six months;
• your gross earnings have dropped by at least 20% following your disability, with a minimum reduction of £15 a week.

This is payable if either you or your partner are working for at least 30 hours a week. If you or your partner, or both of you, are responsible for a child or young person, you qualify for the 30 hour element if between you, you work for 30 hours or more, as long as at least one of you works for 16 hours or more a week.

If you are claiming jointly with your partner, you are usually entitled to the second adult element, unless:

• you are getting the 50 plus element because one of you is over 50 years of age, and neither of you works 30 or more hours a week; or
• one of you is serving a custodial sentence of more than 12 months.

You are entitled to the 50 plus element if you or your partner:

• are aged 50 or over;
• have started work;
• work for at least 16 hours a week, and
• have been out of work and receiving benefits for at least six months before starting work.

Where you claim jointly, and you both fulfil the above requirements, you are both entitled to receive the 50 plus element. As a couple you can claim the second adult element in addition, provided that either:

• at least one of you works 30 hours a week or more, or
• one or both of you are responsible for a child or young person, or
• one or both of you have a disability.

• income support;
• jobseeker's allowance;
• incapacity benefit;
• severe disablement allowance;
• both a state retirement pension and the state pension credit;
• national insurance credits.

• carers allowance,
• bereavement allowance, or
• widowed parent's allowance.

You are entitled to receive the childcare element if you:

• are a lone parent engaged in qualifying remunerative work;
• are part of a couple; one or both of you is responsible for a child or young person; and you are both engaged in qualifying remunerative work;
• are part of a couple in which one of you is engaged in qualifying remunerative work, and the other is either incapacitated, a hospital in-patient, or in prison;

and you are incurring relevant childcare charges for a child of a prescribed description for whom either or both of you is responsible.

The words in italics and the other terms are explained below:

Incapacitated

This means that the non-working member of the couple must be receiving one of the following:

• housing benefit or council tax benefit with a disability premium, or a higher pensioner premium;
• disability living allowance (DLA);
• attendance allowance (AA);
• an equivalent of DLA/AA which is paid as a pension increase under a war pension scheme or under an industrial injuries scheme which is analogous to an allowance or increase of disablement pension;
• severe disablement allowance;
• increase of disablement pension;
• incapacity benefit at the short-term higher rate or the long-term rate;
• industrial injuries benefit with constant attendance allowance;
• war disablement pension with constant attendance allowance or mobility supplement;
• a vehicle under the Invalid Vehicle Scheme.

You will still qualify if you would be getting DLA or AA but are not because you are in hospital.

Relevant childcare charges

This means childcare charges paid by one or both of you for a child for whom one or both of you is responsible. The child care provider must be registered or approved, the meaning of which is described in the Revenue's useful leaflet on childcare WTC5.

This excludes most informal childcare. Specifically excluded is childcare provided wholly or mainly in the child's home by a relative of the child; but a relative such as a grandparent can provide care in their home provided they are a registered childminder, If an approved provider, they must also care for at least one non-family member.

Relative

In this context, this means a parent, grandparent, aunt, uncle, brother or sister whether by blood, half-blood, marriage or affinity.

You can claim the childcare element of WTC from the date of birth of your child, as long as you usually worked at least 16 hours per week before your maternity, adoption or paternity leave (ordinary and first 13 weeks additional) began. Note: During the 2003/04 tax year the childcare element was not available for new children during periods of maternity, adoption or paternity leave.

Child of a prescribed description

You are eligible for childcare support only until the 1 September following your child's

• 15th birthday, or
• 16th birthday if your child is on the blind register or came off it in the 28 weeks before you claimed, or you receive disability living allowance for the child (or would receive it but for the child being a patient in hospital).

Responsible for a child

For the meaning of this, see the commentary on Child tax credits

Amount of childcare support.

The childcare element provides support of 80% of eligible childcare costs. Eligible childcare costs are the amount you spend on approved childcare, up to a maximum of £175 a week for one child, and £300 for two or more children. Therefore, the maximum support you can receive where you have one child in childcare is £175 x 80% = £140 a week, and £300 x 80% = £240 a week for two or more children.

Calculating and claiming childcare element

The childcare costs for which you can claim support are your average weekly childcare costs .

The basic calculation involves adding together what you pay each week for childcare over a period and dividing by the number of weeks in that period. Results in pence are rounded up to the nearest whole pound.

Helpful numerical examples are given in the Revenue's booklet on childcare credit WTC5 and these cover a number of different situations.

In summary:

• If you pay a fixed weekly amount, add up what you have paid for the last 4 weeks for each child and divide the result by 4.
• If you pay a variable weekly amount (for example, more in the school holidays than in term time), add up the total you have paid in the last 52 weeks and divide the result by 52.
• If you pay your childcare charges monthly, multiply the monthly amount by 12 and divide by 52 to get to the average weekly figure. Where the monthly amount is variable, add up the bill for the past 12 months and divide by 52.
• If the information is not available to complete the above calculations - for example if you have only just started claiming for childcare - the Revenue will accept an estimate of the weekly average based on how much you expect to pay over the next 12 months.
• If you have made arrangements with a childcare provider but have not yet started to pay them, check with them what they will charge and estimate what you will pay each week using that information.

What to tell the Revenue

You need to tell the Revenue if your average weekly childcare costs fall by more than £10 a week for four consecutive weeks, or if you cease paying for childcare, as your tax credit award will need to be adjusted downwards to reflect the change.

It is advisable to regularly check that your childcare continues to be registered or approved. If your childcare ceases to be so then you will no longer be entitled to claim childcare costs.

You must tell the Revenue of any such change within one month of it occurring, otherwise you may incur a penalty of up to £300.

You should also tell the Revenue if your average weekly childcare costs rise , as this will cause your tax credit entitlement to increase. You should inform the Revenue within three months of the change, as it is not possible to backdate an increase in credit by more than that.

Finally, the Revenue are permitted to check information you give them with your childcare provider, so it is important to let them know if you change your provider or if your provider is no longer registered or approved.