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Make provision about child trust funds and for connected purposes. |
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Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and |
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consent of the Lords Spiritual and Temporal, and Commons, in this present |
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Parliament assembled, and by the authority of the same, as follows:— |
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(1) | This Act makes provision about child trust funds and related matters. |
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(2) | In this Act “child trust fund” means an account which— |
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(a) | is held by a child who is or has been an eligible child (see section 2), |
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(b) | satisfies the requirements imposed by and by virtue of this Act (see |
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(c) | has been opened in accordance with this Act (see sections 5 and 6). |
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(3) | The matters dealt with by and under this Act are to be under the care and |
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management of the Inland Revenue. |
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(1) | For the purposes of this Act a child is an “eligible child” if the child was born |
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after 31st August 2002 and either— |
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(a) | a person is entitled to child benefit in respect of the child, or |
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(b) | entitlement to child benefit in respect of the child is excluded by the |
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provisions specified in subsection (2)(a) or (b) (children in care of |
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(2) | The provisions referred to in subsection (1)(b) are— |
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(a) | paragraph 1(c) of Schedule 9 to the Social Security Contributions and |
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Benefits Act 1992 (c. 4) and regulations made under it, and |
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(b) | paragraph 1(1)(f) of Schedule 9 to the Social Security Contributions and |
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Benefits (Northern Ireland) Act 1992 (c. 7) and regulations made under |
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(3) | Where entitlement to child benefit in respect of a child is excluded by a directly |
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applicable Community provision, subsection (1) applies as if that exclusion did |
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(4) | Where a person is entitled to child benefit in respect of a child only because of |
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a directly applicable Community provision, subsection (1) applies as if the |
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person were not so entitled. |
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(a) | does not have the right of abode in the United Kingdom within the |
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meaning given by section 2 of the Immigration Act 1971 (c. 77), |
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(b) | is not a qualified person, or a family member of a qualified person, |
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within the meaning of the Immigration (European Economic Area) |
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Regulations 2000 (S.I. 2000/2326), and |
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(c) | is not settled in the United Kingdom within the meaning given by |
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section 33(2A) of the Immigration Act 1971, |
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| is not an eligible child. |
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(6) | A person is not to be regarded for the purposes of subsection (1)(a) as entitled |
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to child benefit in respect of a child (otherwise than by virtue of subsection (3)) |
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unless it has been decided in accordance with— |
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(a) | Chapter 2 of Part 1 of the Social Security Act 1998 (c. 14), or |
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(b) | Chapter 2 of Part 2 of the Social Security (Northern Ireland) Order 1998 |
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(S.I. 1998/1506 (N.I. 10)), |
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| that the person is so entitled (and that decision has not been overturned). |
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(7) | Regulations may amend subsection (1) by substituting for the reference to 31st |
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August 2002 a reference to an earlier date. |
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3 | Requirements to be satisfied |
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(1) | A child trust fund may be held only with a person (referred to in this Act as an |
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“account provider”) who has been approved by the Inland Revenue in |
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accordance with regulations. |
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(2) | An account is not a child trust fund unless it is an account of one of the |
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descriptions prescribed by regulations. |
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(3) | The provision which may be made by regulations under subsection (1) |
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includes making approval of an account provider dependent on the person |
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undertaking to provide accounts of such of the descriptions for which |
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provision is made by regulations under subsection (2) as is prescribed by the |
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(4) | The terms of a child trust fund must— |
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(a) | secure that it is held in the name of a child, |
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(b) | secure that the child is beneficially entitled to the investments under it, |
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(c) | secure that all income and gains arising on investments under it |
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constitute investments under it, |
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(d) | prevent withdrawals from it except as permitted by regulations, and |
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(e) | provide that only a responsible person may give instructions to the |
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account provider with respect to its management. |
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(5) | Regulations may impose other requirements which must be satisfied in |
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relation to child trust funds. |
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(6) | In this Act “responsible person”, in relation to a child, means a person who has |
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parental responsibility in relation to the child, other than— |
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(a) | a local authority or, in Northern Ireland, an authority within the |
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meaning of Children (Northern Ireland) Order 1995 (S.I. 1995/755 (N.I. |
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(b) | a person under the age of 18 or, in Scotland, 16, |
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| but, in Scotland, means the child if aged 16 or over. |
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(7) | “Parental responsibility” means— |
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(a) | parental responsibility within the meaning of the Children Act 1989 |
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(c. 41) or the Children (Northern Ireland) Order 1995, or |
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(b) | parental responsibilities within the meaning of the Children (Scotland) |
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(1) | Any assignment of, or agreement to assign, investments under a child trust |
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fund, and any charge on or agreement to charge any such investments, is void. |
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(2) | On the bankruptcy of a child by whom a child trust fund is held, the |
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entitlement to investments under it does not pass to any trustee or other person |
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acting on behalf of the child’s creditors. |
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(3) | “Assignment” includes assignation; and “assign” is to be construed |
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(4) | “Charge on or agreement to charge” includes right in security over or |
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agreement to create a right in security over. |
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(5) | “Bankruptcy”, in relation to a child, includes the sequestration of the child’s |
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estate and the appointment on the child’s estate of a judicial factor under |
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section 41 of the Solicitors (Scotland) Act 1980 (c. 46). |
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5 | Opening by responsible person |
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(1) | In the case of each child who is first an eligible child by virtue of section 2(1)(a) |
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the Inland Revenue must issue, in a manner prescribed by regulations, a |
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voucher in such form as is so prescribed. |
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(2) | The voucher must be issued to the person who is entitled to child benefit in |
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respect of the child (or, in the case of a child who is such an eligible child |
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because of section 2(3), to a responsible person). |
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(3) | A responsible person may, by giving the voucher to an account provider |
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within such period beginning with the day on which the voucher is issued as |
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is prescribed by regulations, apply to open for the child with the account |
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provider a child trust fund of any description provided by the account |
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(4) | On receipt of the voucher the account provider must— |
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(a) | open, in accordance with regulations, a child trust fund of that |
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description for the child and |
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(b) | inform the Inland Revenue in accordance with regulations. |
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6 | Opening by Inland Revenue |
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(1) | In the case of each child to whom this section applies, the Inland Revenue must |
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apply to open for the child with an account provider selected by the Inland |
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Revenue a child trust fund of any description provided by the account |
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provider and selected by the Inland Revenue. |
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(2) | The account provider must— |
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(a) | open, in accordance with regulations, a child trust fund of that |
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description for the child and |
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(b) | inform the Inland Revenue in accordance with regulations. |
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(3) | This section applies— |
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(a) | to a child in respect of whom a voucher is issued under section 5(1) but |
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in whose case subsection (4) is satisfied, and |
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(b) | to a child who is first an eligible child by virtue of section 2(1)(b). |
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(4) | This subsection is satisfied in the case of a child if— |
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(a) | the period prescribed under section 5(3) expires without a child trust |
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fund having been opened for the child, or |
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(b) | it appears to the Inland Revenue that there is no-one who is a |
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responsible person in relation to the child. |
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(5) | No liability is to arise in respect of the selection of an account provider, or a |
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description of child trust fund, by the Inland Revenue under this section. |
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Regulations may make provision about the circumstances in which— |
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(a) | a child trust fund which is an account of one of the descriptions |
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prescribed by regulations may become an account of another of those |
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(b) | a child trust fund held with one account provider may be transferred to |
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Contributions and subscriptions |
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8 | Initial contribution by Inland Revenue |
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(1) | The Inland Revenue must pay to an account provider such amount as is prescribed by |
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regulations if the account provider has— |
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(a) | informed the Inland Revenue under section 5(4) or 6(2) that a child trust fund |
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(b) | made a claim to the Inland Revenue in accordance with regulations. |
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(2) | On receipt of the payment the account provider must credit the child trust fund |
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with the amount of the payment. |
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9 | Supplementary contribution by Inland Revenue |
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(1) | If this section applies to a child the Inland Revenue must inform the account |
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provider with whom a child trust fund is held by the child that this section |
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(2) | If the account provider makes a claim to the Inland Revenue in accordance with |
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regulations, the Inland Revenue must pay to the account provider such amount as is |
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prescribed by regulations. |
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(3) | On receipt of the payment the account provider must credit the child trust fund |
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with the amount of the payment. |
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(4) | This section applies to a child if— |
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(a) | a child trust fund is held by the child, |
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(b) | the child was first an eligible child by virtue of section 2(1)(a), and |
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(c) | the condition in subsection (5) is satisfied in relation to the child. |
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(5) | That condition is that it has been determined in accordance with the provision |
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made by and by virtue of sections 18 to 21 of the Tax Credits Act 2002 (c. 21)— |
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(a) | that a person was, or persons were, entitled to child tax credit in respect |
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of the child for the child benefit commencement date, and |
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(b) | that either the relevant income of the person or persons for the tax year |
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in which that date fell does not exceed the income threshold or the |
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person, or either of the persons, was entitled to a relevant social |
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security benefit for that date, |
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| and that determination has not been overturned. |
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(6) | In subsection (5)(b)— |
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| “the income threshold” has the meaning given by section 7(1)(a) of the Tax |
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| “the relevant income”, in relation to a person or persons and a tax year, |
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has the meaning given by section 7(3) of that Act in relation to a claim |
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by the person or persons for a tax credit for the tax year, |
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| “relevant social security benefit” means any social security benefit |
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prescribed for the purposes of section 7(2) of that Act, and |
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| “tax year” means a period beginning with 6th April in one year and |
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ending with 5th April in the next. |
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(7) | If the child benefit commencement date fell before the appointed day, this |
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section applies in relation to the child even if the condition in subsection (5) is |
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not satisfied in relation to the child provided that the condition in subsection |
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(8) | That condition is that— |
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(a) | income support, or income-based jobseeker’s allowance, was paid for |
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the child benefit commencement date to a person whose applicable |
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amount included an amount in respect of the child, or |
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(b) | working families’ tax credit, or disabled person’s tax credit, was paid |
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for that date to a person whose appropriate maximum working |
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families’ tax credit, or appropriate maximum disabled person’s tax |
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credit, included a credit in respect of the child. |
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(9) | If the child benefit commencement date fell before 6th April 2003, subsection |
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(a) | the reference in paragraph (a) to the child benefit commencement date |
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were to any date in the tax year beginning with 6th April 2003, |
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(b) | the reference in paragraph (b) to the tax year in which the child benefit |
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commencement date fell were to the tax year beginning with 6th April |
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(c) | the reference in paragraph (b) to being entitled to a relevant social |
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security benefit for the child benefit commencement date were to being |
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so entitled for any date in that tax year for which the person was, or the |
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persons were, entitled to child tax credit in respect of the child. |
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(10) | “Child benefit commencement date”, in relation to a child, means the first day |
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for which child benefit was paid in respect of the child (otherwise than because |
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of a directly applicable Community provision). |
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10 | Further contributions by Inland Revenue |
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(1) | Regulations may make provision for the making by the Inland Revenue in the |
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circumstances mentioned in subsection (2) of payments to account providers of child |
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(a) | eligible children, or |
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(b) | any description of eligible children, |
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| of amounts prescribed by, or determined in accordance with, regulations. |
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(2) | The circumstances referred to in subsection (1) are— |
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(a) | the children attaining such age as may be prescribed by the regulations, |
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(b) | such other circumstances as may be so prescribed. |
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(3) | The regulations must include provision— |
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(a) | for making account providers aware that such amounts are payable, |
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(b) | about the claiming of such payments by account providers, and |
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(c) | about the crediting of child trust funds by account providers with the |
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11 | Recouping Inland Revenue contributions |
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(1) | Regulations may make provision requiring that, in circumstances prescribed |
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by the regulations, a person of a description so prescribed is to account to the |
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Inland Revenue for amounts credited to a child trust fund in respect of Inland |
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Revenue contributions (together with any income and gains arising in |
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consequence of the crediting of those amounts). |
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(2) | “Inland Revenue contributions” means payments made by the Inland Revenue |
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which were required to be made under or by virtue of sections 8 to 10 or which |
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the Inland Revenue considered were required to be so made. |
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(1) | No subscription may be made to a child trust fund otherwise than by way of a |
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(2) | Regulations may prescribe the maximum amount that may be subscribed to a |
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child trust fund in each year (otherwise than by way of credits made under or |
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by virtue of this Act or income or gains arising on investments under the child |
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(3) | “Year”, in relation to a child trust fund held by a child, means— |
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(a) | the period beginning with the day on which the child trust fund is |
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opened and ending immediately before the child’s next birthday, and |
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(b) | each succeeding period of twelve months. |
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