Tax Credits: Who can claim?

To be entitled to tax credits, a claim must be made. Without a claim, there can be no entitlement. 

Tax credits are gradually being replaced by Universal Credit and HMRC state it is no longer possible to make a brand new tax credit claims. The only exception to this is for a some people who are granted refugee status.

Universal Credit roll-out

UC is now available in all parts of the UK. As a result, HMRC state it is no longer possible to make brand new claims for tax credits. Instead, people will need to claim universal credit or pension credit. The only exception to this is for certain people who are granted refugee status. It is generally not possible to claim UC and tax credits at the same time.

Existing tax credit claimants can continue to renew their claims, add new elements to existing claims and can add working tax credit to a child tax credit claim and vice versa as these are not counted as brand new claims. See our UC page which explains when existing tax credits will be affected by UC.

If an existing tax credit claimant makes a claim for universal credit, their tax credit award will end even if they are not entitled to UC.

From 16 January 2019, people who received a severe disability premium alongside certain social security benefits were not able to claim UC and were therefore permitted to make new claims for tax credits (and other legacy benefits). However, this ‘SDP Gateway’ was revoked with effect from 27 January 2021 as such people are able to make a claim for UC.

Similarly, until 31 March 2022, it was possible for ‘frontier workers’ to make new claims for tax credits. This gateway ended from that date as those workers can now claim UC. Frontier workers are people who are 'in Great Britain' (under Section 4(1)(c) Welfare Reform Act 2012) or 'in Northern Ireland' (under Article 9(1)(c) of Welfare Reform (Northern Ireland) Order 2015) but do not reside in either GB or NI. Crown servants or members of HM Forces who are posted overseas (as defined under the UC Regulations 2013) are not frontier workers.

For people who have reached qualifying state pension credit age (or where both members of a couple have reached this age), please see our Pensioners page in the UC section. Most people who are part of a mixed age couple are only able to claim UC, although there is one exception to this.

NOTE: HMRC’s position is that no brand new tax credit claims are possible unless the person is already claiming either WTC or CTC and wants to claim the other tax credits or they are renewing their claim. However, the legislation is not clear on this point and one interpretation of the current legislation is that some people may be able to make new claims for tax credits. We have written some guidance for advisers which provides further information about this – however, it is extremely complex and should not be followed without speaking to a welfare rights specialist.

Under the tax credit system, it is possible for a  claim for tax credits to be made from an earlier date in some cases - for example, where the claimant is waiting for a decision on a qualifying disability benefit that is needed to establish entitlement to tax credits or for asylum seekers who are given refugee status. It is possible for certain people who a granted refugee status to make a new claim for tax credits. See the backdating page for more information about new claims in these circumstances.

Couples

Members of a couple must make a joint claim with their partner. Although this may appear a straightforward and sensible requirement, it is one of the more complicated and problematic parts of the tax credits system. You can read more about the detailed requirements in our Understanding Couples section of the site.

Being in the UK

Tax credits may be claimed by persons who are in the United Kingdom. The United Kingdom is England, Scotland, Wales, Northern Ireland, and adjacent islands, but does not include the Isle of Man or the Channel Islands. If a person ceases to be in the UK, their entitlement to WTC and CTC ends at that point under TCA 2002, section 3(4), unless any of the exceptions outlined below apply.

The basic rule is that in order to be ‘in the UK’ you need to be present in the UK and ordinarily resident here throughout the period of an award. Additionally from 1 May 2004 for Child Tax Credit you must also have a right to reside and, for claims made after 1 July 2014, you must have been ‘living in the UK’ for the 3-months preceding your claim. This basic rule is subject to some exceptions.

The 3-month rule

The residence rules for child tax credit changed from 1 July 2014, when the 3-month rule was introduced. The rule, introduced by The Child Benefit (General) and the Tax Credits (Residence) (Amendment) Regulations 2014 (SI.No.2014/1511) does not apply to claims made (or treated as made) prior to that date.

The 3-month rule for child tax credit is covered in HMRC’s tax credit technical manual (TCTM 02035)

Presence and temporary absences

HMRC interpret presence as requiring a physical presence in the UK throughout the award period. This general requirement is subject to three important exceptions.

The first involves those who are temporarily absent from the UK. Providing a claimant is ordinarily resident and remains so throughout the absence, they will be treated as present and thus in the UK during the first 8 weeks of any absence. This is extended to 12 weeks where the absence is in connection with:

Any absence must be temporary from the start. It must also be unlikely to last more than 52 weeks. If the absence is expected to last for longer, the person ceases to be treated as in the UK from the date they leave. TCTM 02040 states that the question of whether the absence is unlikely to exceed 52 weeks need only be considered once, at the beginning of the absence.

The second exception is for Crown Servants who are posted overseas. For the purposes of the tax credit legislation, a Crown Servant posted overseas is a person performing the duties of any office or employment under the Crown in Right of the United Kingdom.

The Crown Servant must be ordinarily resident in the UK or must have been immediately before the posting or the first of consecutive postings. Alternatively, immediately before the posting, or the first of consecutive postings, they were in the UK in connection with that posting. This alternative requirement is of particular help to members of the armed forces who may be posted abroad too quickly to enable them to establish ordinary residence before they leave.

Partners of Crown Servants are also covered by this exception. There is no requirement for such partners to be ordinarily resident in the UK. However, regulations require them to be either present in the UK or accompanying the Crown Servant on their posting. The rules on temporary absence also apply to partners of Crown Servants, allowing absence from the UK itself or from the place where the Crown Servant is posted. For members of the armed forces who are deployed on operations away from an overseas base, the TCTM02050 confirms that:

Where a member of the Armed Forces is posted or deployed from an overseas base to an operational area and is unaccompanied by their spouse or partner, then that spouse or partner in the country where the overseas base is situated shall continue to be treated as “in the UK”.’

The final exception to the general presence rule is for those who are entitled to WTC and CTC by virtue of European law. In such cases, entitlement is governed by EU law which overrides UK domestic law. An example of such a situation is someone living in Spain who continues to claim CTC under EU law.

Special cases

The usual residency rules apply to seafarers and offshore workers. The UK includes its territorial waters and therefore someone working within those waters will continue to be in the UK for tax credit purposes. If they are outside of those waters, including the continental shelf, they will no longer be treated as in the UK.

The temporary absence rules apply to seafarers and offshore workers, and if the absence is less than 8 weeks, they continue to be in the UK for tax credit purposes.

As with any other incidence of temporary absence, if the period away is in excess of 8 weeks, they must notify HMRC who will end their claim. If they were claiming jointly, their partner can then claim as a single person (with only their income taken into account) until such time as the worker returns. At this point, another notification is needed to HMRC to end the single claim and start a new joint claim. In practice this leads to a complicated claim history, particular at renewal time when renewal papers will need to be completed for each separate claim.

Ordinary residence

The Tax Credits (Residence) Regulations 2003(SI 2003/654) state that ‘A person shall be treated as not being in the UK for the purposes of Part 1 of the Act if he is not ordinarily resident in the UK’.

There is no further definition of ordinary residence in the legislation. Despite the same term being used in the tax system, national insurance and child benefit, HMRC guidance asserts that the definition for tax credits is different. HMRC guidance states that:

'a person is ordinarily resident if they are normally residing in the United Kingdom (apart from temporary or occasional absences), and their residence here has been adopted voluntarily and for settled purposes as part of the regular order of their life for the time being.'

The guidance (TCTM02028- 02031) gives more detailed information about the requirement including those who are treated as being ordinarily resident in the UK.

Right to Reside

When tax credits were introduced in April 2003, there was no requirement to have a right to reside for either WTC or CTC. However, from 1 May 2004, a person is not treated as being in the UK for CTC purposes if they do not have a right to reside in the UK.

The rules covering right to reside for tax credits are covered in HMRC’s tax credit technical manual (TCTM 02070).

The withdrawal agreement

HMRC’s tax credit technical manual provides information about the application of the Immigration and Social Security Co-ordination (EU Withdrawal Act 2020) as it applies to tax credits.

Subject to immigration control

The general rule is that those who are subject to immigration control are not entitled to WTC or CTC. As with most rules in tax credits, this is subject to a number of important exceptions.

The term ‘subject to immigration control’ has the same meaning as Immigration and Asylum Act 1999, section115(9).

TCTM02102 summarises those who are subject to immigration control. There are some exceptions to the general rule which are explained in the TCTM.

Asylum seekers, refugees and section 67 leave

The Tax Credits (Immigration) Regulations 2003(SI 2003/654) also deal with claims by asylum seekers. Such people are generally subject to immigration control and are not entitled to tax credits.

Asylum seekers are generally subject to immigration control and are not entitled to tax credits. However, if their claim for asylum is accepted and they are granted refugee status, Regulation 3(5) allows tax credits to be backdated to the date the claim for asylum was submitted. This applies only if the person claims tax credits within one month (three months prior to 6 April 2012) of receiving notification of their refugee status. Any backdating will be reduced by support received from the Government under the Immigration and Asylum Act 1999 unless any DWP backdating has already been reduced to take these payments into account.

The same backdating rules apply to claims from people who are granted section 67 leave (this can cover cases associated with the 'Windrush' generation). Where a person is granted section 67 leave, their claim can be backdated to the date their application for leave to remain was submitted to the Home Office, providing they claim tax credits within 1 month of receiving notification of their section 67 leave.

For more information about how these rules apply following the introduction of universal credit see our claims section.

Last reviewed/updated 20 May 2022