A tax credits trap for those on overseas trips

Published on 4 January 2005

Following the tsunami disaster on Boxing Day, many people living in the UK will be making previously unplanned visits to relatives overseas. But beware: temporary absence overseas can cost a working couple their childcare support payments.

This can come as a big shock and put the couple in unexpected debt, particularly if the partner remaining in the UK needs to have childcare costs met in order to be able to work.


The tax credit rules for people going overseas have been framed so that short visits overseas of up to 8 weeks, or 12 weeks for special compassionate circumstances, mean that people do not lose their ordinary credits.

In brief, to be eligible for tax credits a claimant has to be in the UK; and if they go abroad temporarily, the law deems them to be still in the UK for the first 8 (or 12) weeks of absence so they can claim tax credits during that time. Where a couple makes a joint claim, then one partner goes abroad, the joint claim remains valid for the first 8 (or 12) weeks of that partner's absence. After that time, the partner who remains in the UK must claim as a single person.

But there is a very unfortunate gap in the law. If one member of a couple gives up work on going abroad, the couple's entitlement to the childcare payments under Working Tax Credit also ceases until the partner returns to the UK and resumes work. This is because both members of a couple normally have to be in work in order to get the childcare tax credit.

Very often people going abroad for family emergencies, particularly those in low paid and temporary work, will not continue in employment whilst abroad. Despite the remaining partner having to work, and to pay for childcare whilst the partner is overseas, they will get no help with childcare costs until the expiry of the 8 or 12 week period. At the end of that time the partner in the UK can claim childcare as though they were a single person, until the other partner returns from abroad.

It is clearly unfair that no help should be provided to the partner in work remaining in the UK.

It is strange that help is given for the couple with two incomes coming in, but not if the parent left behind in the UK is effectively a lone parent on a single income. It is even more bizarre that the rules bear hardest on those who go overseas due to death or illness in the family.

These adverse rules do not apply to civil servants.

LITRG have taken up this issue with the Revenue, with the support of other tax and welfare rights advisers, as we believe that this rule is a mistake that has slipped through the legislative net.


Contact Name: John Andrews (Tel: 0844 579 6700 , Fax: 0844 579 6701)