Appendix 2: Tax Credits (Claims and Notifications) (Amendment) Regulations 2017 (SI 2017/597)
Additional information from HM Revenue and Customs
Tax-Free Childcare (TFC) under the Childcare Payments Act 2014 is a scheme that provides government support with the costs of necessary childcare to working families. It works through parents opening an account for an entitlement period; during that period they can pay money in, have it topped-up by government on an 80:20 ratio and spend the balance on childcare. The scheme is targeted at a broad range of parent circumstances, including those who are emerging from in-work benefits as their circumstances improve. The journey for those leaving tax credits to join TFC is that the opening of a childcare account (which follows from HMRC finding that the person’s declaration of eligibility for the scheme is valid) automatically stops any current tax credits award (section 30 of CPA 14 refers). This offers a good customer journey for customers that want to transition from one to the other as they can simply apply for TFC with no preliminary steps needed …
After the 2015 election the government introduced what is commonly known as the 30 hours free childcare scheme in England. This is covered by the Childcare Act 2016 and the Childcare (Early Years Provision Free of Charge) (Extended Entitlement) Regulations 2016. This scheme is being delivered through a joint application portal with TFC …
We are aware that, if many thousands of parents use our application to apply only for 30 hours and not TFC, then some will make errors and apply for TFC by mistake resulting in an unintended termination of their tax credits. We wanted to limit any financial loss for these parents. We designed the change in question and discussed it with the Social Security Advisory Committee … Our intention was to lay it by late April so as to be in place by the time the bulk of parents apply for 30 hours (expected to be between mid-May and early July so as to get childcare for September arranged and agreed before the summer holidays). The sudden and unexpected start of election purdah on 21 April, and the imminent prorogation of Parliament that was to follow it, caused us to bring forward the making and laying of this amendment by a few days. This ensured that Lords Commissioners of the Treasury were available to sign it and that it got laid in time for its need. We were content for the making and laying to occur just into purdah given that this was an uncontroversial matter and part of the normal “business as usual” of a government …
The online joint application portal contains a series of warnings. If a parents makes a mistake, accidentally applies for TFC and loses tax credits they are quickly informed of the termination. They then call our call centres. Our call centre staff have guidance on handling such calls and help parents through the process of getting back into tax credits without an effective break in entitlement.
21 June 2017