Are you eligible to claim?
Being 'in the UK'
Right to reside
People subject to immigration control
If you are 16 years of age or over, and in the UK you are eligible to make a claim to tax credits. If you are a single person or a lone parent, you must make a single claim. If you are part of a couple, or a polygamous unit, you must make a joint claim.
Single people are not entitled to make joint claims, and couples or polygamous units are not entitled to make single claims. If a single person becomes part of a couple or polygamous unit, their award automatically ceases, and they must report their change of status to HMRC within one month or face a penalty of up to £300. Similarly, if a couple or polygamous unit ceases to be such (eg on separation or death), their award is automatically brought to an end.
An overpayment can accrue for each day that a single award continues to be paid when the claimant has become part of a couple. For that reason it is very important to notify HMRC promptly of any change of status. The potential harshness of this rule can be ameliorated by the policy of ‘notional entitlement’, under which a couple who fail to notify the ending of their couple status promptly, or a single claimant who is slow in reporting that he or she has become part of a couple, can sometimes have the tax credits that would have been paid to them in their new capacity set against the overpayment.
If you are a couple or a polygamous unit, both or all of you have to be in the UK. A consequence of this is that if, for example, you are a couple, and one of you goes abroad for longer than 8 or 12 weeks, you are deemed by tax credit law to have separated, even if you have no intention of ending the relationship.
Back to the top
A joint claim for tax credits means that each of the claimants takes equal responsibility for the accuracy of the information they give in support of the claim. Similarly, if their award is overpaid, they are both equally liable under the law to repay the overpayment.
When couples separate, both continue to be equally liable under the law for any overpayment resulting from their joint claim. However, to mitigate the harshness of that rule (as illustrated in the above example), HMRC introduced a policy in August 2009 which means that if either or both of the couple engage with Debt Management and Banking they will only pursue each partner for 50% of the overpayment.
If a partner engages with HMRC and pays their agreed 50%, either by lump sum or via a payment plan, they will not ask that person for the other 50% should their ex-partner refuse to pay or if they cannot be found.
Meaning of 'couple'
A 'couple' means a married couple, or two people of the opposite sex who live together as though they were married. It also means two people who are civil partners of each other, or who live together as though they were civil partners.
Members of a couple, whether married, unmarried or same-sex, are known in tax credits parlance as 'partners'.
Back to the top
You are a married couple for tax credits purposes if you are:
- married to each other, AND
- neither separated under a court order, nor separated in circumstances in which the separation is likely to be permanent.
Thus, a married couple who are judicially separated are treated as two single people for tax credits. A married couple who are not judicially separated, but are in fact separated and are unlikely to start living together again, are also treated as two single people for tax credits.
This is often a problematic area of tax credits. If you are married and separate, it is advisable to contact the tax credit helpline and explain your marital situation fully to find out whether your joint claim should be ended. You should take detailed notes of the advice you receive and the date, operator's name and time of the call.
We have seen several cases where HMRC has incorrectly applied the law relating to unmarried couples (and cohabiting civil partners) to married couples (and civil partners). This is particularly so in the case of the helpline who seem to end claims without asking further questions about whether the separation is likely to be permanent or if it is of a temporary nature.
Whether spouses are separated or not can give rise to difficult questions of interpretation.
- What if only one spouse wishes to separate?
The expression 'nor separated in circumstances where the separation is likely to be permanent' comes from tax legislation, and can give rise to difficulties where one partner wishes to separate and the other does not. The HMRC guidance holds that it is sufficient for one member of the couple to intend to separate, even if he or she has not told the other spouse about it. If HMRC is satisfied that 'there was at the time an intention on the part of one or both of them to break the matrimonial ties by divorce or by remaining apart permanently', that is generally enough to establish a separation.
- What if the spouses are having to live apart, but there is no intention to end the marriage?
HMRC will not regard separation because of illness, work, old age, immigration difficulties or imprisonment as meaning that the couple are living apart for tax purposes unless they intend to separate permanently. Where the parties are living apart because one of them is in a hospital or a nursing home because of illness or old age, but there is no intention to end the marriage, the Revenue will treat them as continuing to live together.
Particular rules apply where one of the spouses has gone abroad temporarily.
- What about short periods of separation?
Short periods of separation are generally ignored unless one or both of the parties intended to live apart permanently at the time they separated.
- Separated couples still living in the same house
It sometimes happens that a couple who are in fact separated are still out of necessity living under the same roof, even sleeping in the same bed (if somewhat frostily). In such cases HMRC says it will look for 'the same degree of separation within the household as there would be if one of them had left home'. Factors HMRC will look at include:
- how the accommodation has been divided between the parties;
- arrangements for sharing the kitchen, bathroom and similar facilities;
- what services the parties provide for each other: whether they share meals, do their own laundry, cooking, shopping and cleaning;
- whether they have separated their financial affairs, maintaining their own bank accounts, and what are the arrangements for meeting household expenses;
- whether there is any contact between the parties, or how they avoid contact;
- whether maintenance is paid;
- where the parties are divorced when HMRC becomes involved, whether the grounds for divorce included separation, and if so whether for two or five years.
If two married people or civil partners are going through a ‘trial separation’, the question of whether the separation is permanent will be particularly difficult to resolve. In social security tribunal case CTC 1630/2005-28/04/06, Deputy Commissioner Mark (as he then was) said that before concluding that a separation was likely to be permanent, a tribunal must consider why the separation had occurred and whether there was any indication of a reconciliation. It should conclude that there is at least a 50% chance of reconciliation before it can determine that a single claimant can be treated as part of a married couple. Critically, a tribunal should be slow to differ from a claimant's own genuine assessment of the likelihood of reconciliation.
Back to the top
An unmarried couple for tax credits is two people of the opposite sex living together as if they were husband and wife. HMRC are always on the look out for people making single claims when in fact they are living with someone. Sometimes people are reluctant to claim as a couple and forego the higher credits they would receive as a single claimant; at other times the claimants simply do not see themselves as 'living together' in any sense. This may be where the parties do not expect their relationship to last; or they may simply be flat- or house-sharing.
HMRC will generally rely on social security law in deciding whether in its view an unmarried couple are living together as husband and wife. There are six tests, none of which is conclusive by itself:
- whether the parties live together in the same household;
- whether the parties have a sexual relationship;
- whether the relationship is a stable one;
- what are the financial arrangements between the partners;
- whether there are children living with the couple;
- how the members of the couple hold themselves out in public.
All of these tests must be taken as a whole in deciding whether the couple is cohabiting; the presence or absence of one or other factor does not decide the issue by itself. For example:
Living together in the same household - a couple living together solely for mutual support, care and companionship, such as two relatives living together or two friends sharing a house or flat, are probably not cohabiting;
unmarried couples who intend to separate, but are living together under the same roof in separate households, are not necessarily cohabiting;
Presence or absence of a sexual relationship - HMRC should not ask questions about whether the couple are in a sexual relationship; however, if information is offered it may be taken into account when determining whether there is a relationship.
Financial arrangements between the parties - the relationship of landlord or landlady and lodger is apt to attract attention, but where the commercial arrangements are genuine and arm's length there is less chance that the two will be deemed to be cohabiting;
if income and expenditure is pooled and freely shared, or one party supports the other financially, that will strongly indicate cohabitation.
A couple who normally live together but who are temporarily separated, but have no intention to separate, can sometimes not be treated as cohabiting while they are temporarily apart.
Illustration A couple, one of whom lived in London, the other in Manchester, planned to live together in London as soon as a suitable house could be found for the Manchester dweller who was on kidney dialysis. The Social Security Commissioners decided that they were not living together while they were temporarily separated.
Back to the top
Since 5 December 2005, same-sex couples have been able to register as civil partners of each other under the Civil Partnership Act 2004. For tax and tax credit purposes, as for other purposes, civil partnerships very much reflect the rights and obligations of marriage.
Since that date, same-sex couples - whether registered as civil partners of each other or simply living together as if they were civil partners - have been treated as couples for tax credits purposes.
Until 5 December 2005, same-sex couples had to make single claims. On that date, existing same-sex couples became couples for tax credits purposes by operation of law, and were no longer entitled to make single claims.
This meant that any extant single claims made by members of same-sex couples ceased automatically on 5 December 2005. However, those who wished to claim as a couple could then do so. (See Are you eligible to claim? on the nature of single and joint claims.)
Since 5 December 2005, all claims made by members of same-sex couples have had to be joint claims.
The change in the law on 5 December 2005 brought about change of circumstances in the case of a same-sex couple: whereas before the change they were two single people for tax credits purposes, after the change they became a couple. Because the entry into force of the Civil Partnership Act constituted a change of circumstances for them, they were obliged to report their new status to HMRC. In practice, it was generally sufficient for them to declare their status in their renewal papers for 2006/07.
You can find more detailed information about couples and tax credits on Revenue Benefits - our website for advisers.
Back to the top
Like married and unmarried couples, polygamous units must make joint claims for tax credits. That means that all the members of a polygamous unit are equally responsible for the claim and for the accuracy of the information they give in support of it.
For there to be a valid claim by a polygamous unit, all its members must be aged 16 or over, and in the UK.
Back to the top
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.
The basic rule is that in order to be in the UK you need to be physically 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 – see Right to reside section.
There are exceptions:
- if you are temporarily absent from the UK,
- if you are a Crown servant posted overseas, or
- if you are entitled to CTC as an EU national in which case your entitlement is governed by the relevant EC legislation and not by UK domestic law.
HMRC guidance says 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.'
Persons who are deported, expelled, or otherwise removed by compulsion of law from another country to the UK are treated as ordinarily resident here. This rule enables, for example, people who are living and working abroad and are deported because of a worsening political situation to claim tax credits when they arrive back in the UK.
Workers from other member states of the European Union who are exercising their right to work or reside in the UK are treated as ordinarily resident here.
People who were claiming income support (IS) or income-based jobseeker's allowance (IBJSA) before they were migrated to child tax credit are not required to be ordinarily resident if they were exempt from the residence test for IS or IBJSA. This relaxation will last for three years from the time when they are first awarded CTC. It will apply to certain refugees or persons with exceptional leave to remain in the UK.
You are still treated as ordinarily resident in the UK even during certain periods in which you are 'temporarily absent'.
Temporary absence means, for tax credits, any period of absence from the UK which at the start is not expected to last more than 52 weeks.
Some periods of temporary absence are ignored, so that you will still be treated as ordinarily resident in the UK and will still be able to claim tax credits during them. They are:
- any period of up to 8 weeks;
- periods of up to 12 weeks if you are abroad
- to receive medical treatment for yourself, for your partner or for a child or young person for whom you or your partner are responsible; or
- because of the death of your partner, or a child or relative of yours or your partner's.
Relative means brother, sister, ancestor or lineal descendant.
Temporary absence and childcare - an anomaly
The temporary absence rules were framed in order to help claimants who had to go abroad for relatively short periods, so that the requirement to be physically present in the UK did not interrupt their tax credit awards.
Ahmed and Shahida are a married couple with three children. Ahmed has to go to Bangladesh for 10 weeks to sort out family arrangements following his father's death. Because Ahmed's absence does not exceed 12 weeks, he and Shahida can continue to claim tax credits as a couple throughout his absence.
But if the claimant stays abroad for longer than the permitted 8 or 12 weeks, their award comes to an end because they are no longer 'in the UK'. If the claim is a joint one, the partner who remains in the UK must make a single claim once the 8 or 12 week permitted period has expired.
Say that Ahmed stays abroad in Bangladesh for 15 weeks, not 10. Because there has been a death in his family, Ahmed is allowed to stay away for up to 12 weeks without the joint claim being interrupted. But for the remaining 3 weeks, Shahida has to make a new claim as a lone parent.
Shahida in Example 2 may in fact be in a better position after the 12 weeks are up, because she will get more credit as a single claimant than she and Ahmed got as joint claimants.
However, there is a nasty trap if both members of the couple were in work and claiming the childcare element of working tax credit (WTC). Because both members of a couple normally have to be in work for the childcare element to be payable, that part of their award is jeopardised if one member of the couple gives up work on going abroad.
For the first 8 or 12 weeks of his absence, the joint award will continue, and because both members of the couple are not in work, the childcare element will fall. It will revive, however, if the partner who is abroad stays away for longer than 8 or 12 weeks and the partner who remains in the UK makes a single claim as a lone parent. But for the first 8 or 12 weeks this loophole in the law can result in serious financial difficulties for the couple.
When Ahmed goes to Bangladesh he gives up work. This means that he and Shahida can no longer claim childcare element. Without childcare Shahida can no longer go out to work and therefore can no longer claim WTC. The family's income is reduced to income support, child benefit and CTC for the three children. If Ahmed stays abroad for 15 weeks, Shahida can make a single claim to tax credits after 12 weeks, can then go back to work and can claim both CTC and WTC including the childcare element.
This trap is apt to affect people who have to go abroad for family reasons. It is clearly an anomaly as the temporary absence rules were intended to help, not hinder, people in getting tax credits. But because of the interaction with the childcare rules, people can be deprived of support when they most need it, ie when one partner is no longer available to provide a second income and share the burden of childcare.
See our article here for more information on this area.
Crown servants posted overseas and their partners
If you are a Crown servant posted overseas, or the partner of one, you are treated as being 'in the UK' while you are in your overseas post, so long as you were ordinarily resident in the UK before you went overseas.
This means that you can also be temporarily absent from your overseas post on the same terms as a UK resident is able to be temporarily absent from the UK.
Seafarers and offshore workers
If you are a seafarer or offshore worker, you may still claim tax credits for periods when you are absent from the UK, provided that they do not exceed 8 weeks taken consecutively.
The UK extends to the limits of its territorial waters, and you are 'in the UK' for as long as you are working within those limits. Once you go outside those limits, however, your 8 weeks of permitted absence begins. The continental shelf is outside UK territorial waters.
Jake, who is married with children, works on an oil rig on the continental shelf. His working pattern is six weeks on, six weeks off. Because his periods of absence do not exceed six weeks consecutively, he is well within the 8 weeks of permitted absence and he and his wife can continue to claim tax credits throughout.
Of course, the childcare trap highlighted above does not apply to the families of seafarers and offshore workers who are working while they are absent from the UK.
Back to the top
The right to reside is a very complex area of law because there are many things that interact to determine whether or not a person has a right to reside. We recommend that advice is sought from a welfare rights or immigration specialist.
HMRC provide detailed guidance about who has a right to reside in the tax credit technical manual.
Back to the top
If you are a 'person subject to immigration control' the general rule is that you are not entitled to claim tax credits.
To the general rule there are five exceptions, so that you can nevertheless claim tax credits in the following circumstances:
- You were given leave to enter or remain in the UK on condition that someone else undertook to be responsible for your maintenance and accommodation, and you have been in the UK for at least five years.
- You were given leave to enter or remain in the UK on condition that someone else undertook to be responsible for your maintenance and accommodation, and that person has died.
- You have limited leave to enter or remain in the UK on condition that you do not have recourse to public funds, and you have supported yourself throughout your period of limited leave, but you are now temporarily without funds because your supply of funds from abroad has been disrupted, and there is a reasonable expectation that it will be resumed. This exception can only apply for a total of 42 days during any one period of limited leave, including any extensions to that period.
- You are claiming working tax credit, you are a national of an EEA state or Croatia or Turkey, and you are lawfully present in the UK.
- You are claiming child tax credit, you are a national of an EU member state or Algeria, Morocco, Tunisia or Turkey, and you are lawfully working in the UK. For this purpose you are treated as lawfully working in the UK even if you have retired on reaching pension age, or have given up work to look after children or because of pregnancy, widowhood, sickness or invalidity, and accident at work or an industrial disease.
EEA states are Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and United Kingdom.
If you are part of a couple only one of whom is subject to immigration control, you can still make a joint claim and you will be treated as though neither of you was so subject. However, the second adult element of working tax credit will generally not be awarded.
This includes the case where one of you is subject to immigration control, and the other - the one making the claim - is within one of the five exceptions listed above.
But if the one making the claim is within exception 4 above, they can only claim WTC; and similarly if they are within exception 5 they can only claim CTC. But since for the most part the same states are listed under both exceptions, you are only restricted if you are from Croatia - in which case you can only claim WTC, or from Algeria, Morocco or Tunisia - in which case you can only claim CTC.
Similarly, where one member of a polygamous unit is subject to immigration control and any other member is not, or is within one of the exceptions, a joint claim can still be made by the unit.
If you are claiming asylum as a refugee, you are initially a person subject to immigration control and therefore not entitled to tax credits.
But if your claim for asylum is accepted and you are granted refugee status, providing you claim tax credits within one month of that date, it should automatically be backdated to the date on which you first claimed asylum. Any support you received from the Government during that time is deducted from your award. You can see some examples of backdating here.
Back to the top