The Tax Credits (Miscellaneous Amendments) Regulations 2007

These Regulations amend the Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002 (S.I. 2002/2005) (“the Entitlement Regulations”), the Tax Credits (Definition and Calculation of Income) Regulations 2002 (S.I. 2002/2006) (“the Income Regulations”), the Tax Credits (Claims and Notifications) Regulations 2002 (S.I. 2002/2014), the Tax Credits (Payments by the Commissioners) Regulations 2002 (S.I. 2002/2173) and the Tax Credits (Miscellaneous Amendments) Regulations 2006 (S.I. 2006/766).

Regulation 1 provides for citation and commencement.

Regulation 2 introduces the amendments to the Entitlement Regulations.

Regulation 3 updates the definition of “employment zone” to reflect the replacement of the Employment Zones (Allocation to Contractors) Pilot Regulations 2005 (S.I. 2005/1125) with the new Employment Zones (Allocation to Contractors) Pilot Regulations 2006 (S.I. 2006/962).

Regulation 4 inserts a new sub-paragraph in regulation 4(2) of the Entitlement Regulations. The new sub-paragraph applies to a person who is serving a custodial sentence or has been remanded in custody awaiting trial or sentence, and who is engaged in work (whether inside or outside a prison) while he is serving the sentence or remanded in custody. A person of this description is excluded from being engaged in qualifying remunerative work.

Regulation 5 inserts, in regulation 5 of the Entitlement Regulations, references to additional maternity and adoption leave periods under sections 73 and 75B of the Employment Rights Act 1996 (c. 18) and articles 105 and 107B of the Employment Rights (Northern Ireland) Order 1996 (S.I. 1996/1919 (N.I.16)). A person is treated as being engaged in qualifying remunerative work during the first 13 weeks of an additional maternity or adoption leave period.

Regulation 6 amends regulation 14 of the Entitlement Regulations which prescribes categories of eligible child care for the purposes of entitlement to the child care element. One of the amendments provides for the introduction of the Tax Credits (Approval of Child Care Providers) (Wales) Scheme 2007 (S.I. 2007/226 (W.20)) (“the Welsh Child Care Scheme”) which came into force on 1st February 2007 subject to a prohibition on the granting of approvals under the scheme before 6th April 2007. Another amendment provides for the introduction of the Childcare (Voluntary Registration) Regulations 2007 (S.I. 2007/730) which come into force on 1st April 2007.

In regulation 6, paragraph 2 provides that charges in respect of child care which is excluded from being qualifying child care under article 5(3)(d) of the Welsh Child Care Scheme cannot be child care charges for the purposes of section 12 of the Tax Credits Act 2002 (c. 21) (“the Act”). Paragraphs 3 and 4 insert child care providers registered under the Childcare (Voluntary Registration) Regulations 2007 and child care providers approved under the Welsh Child Care Scheme into the list of persons who can provide eligible child care.

Regulation 7 introduces the amendments to the Income Regulations.

Regulation 8 updates the definition of “employment zone” to reflect the replacement of the Employment Zones (Allocation to Contractors) Pilot Regulations 2005 (S.I. 2005/1125) with the new Employment Zones (Allocation to Contractors) Pilot Regulations 2006 (S.I. 2006/962).

Regulation 9 amends paragraph (6A) of regulation 3 of the Income Regulations. This paragraph deals with the conversion rate at which foreign income must be converted to sterling. The HMRC website now shows average exchange rates for the 12 months up to 31st March so paragraph (6A) is amended to reflect this.

Regulation 10(2) amends regulation 4(1) of the Income Regulations by adding a new sub-paragraph to that provision. The new sub-paragraph applies to a person who is serving a custodial sentence or has been remanded in custody awaiting trial or sentence and who is paid an amount for work done while he is serving the sentence or remanded in custody. That amount is treated as “employment income”.

Regulation 10(3) amends Table 1. The Table contains a list of payments and benefits which are disregarded in the calculation of employment income. Two items are added to the list: (a) payment by the Secretary of State for Defence of an operational allowance in respect of service by members of the armed forces in an operational area specified by him and (b) the provision of one mobile telephone which is exempted from tax by section 319 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1).

Regulation 11 amends regulation 8 of the Income Regulations to reflect the introduction of the Education (Student Support) Regulations 2007 (S.I. 2007/176).

Regulations 12 and 13 update the Income Regulations to reflect the replacement of an extra statutory concession by section 756A of the Income Tax (Trading and Other Income) Act 2005 (c. 5) which exempts certain unclaimed accounts containing compensation paid to Holocaust victims from income tax. Regulation 12 amends Table 4 contained in regulation 10 of the Income Regulations which lists payments which are to be disregarded in the calculation of investment income and regulation 13 amends regulation 12 (definition of foreign income) of the Income Regulations.

Regulation 14 amends the Tax Credits (Claims and Notifications) Regulations 2002. Regulation 14(2) amends regulation 11(3)(a) of those regulations by bringing forward from 31st August to 31st July the date by which a person or persons claiming tax credits must make a declaration in response to a notice under section 17 of the Act for that declaration to be treated as a claim treated as made on the preceding 6th April. Regulation 14(3) amends regulation 33(a) of those regulations by bringing forward one of the dates by which a person or persons must make a declaration or statement in response to a notice under section 17(2) or (4) of the Act, from the 31st August to the 31st July following the end of the tax year to which the notice relates.

Regulation 15 amends regulation 12(3) of the Tax Credits (Payments by the Commissioners) Regulations 2002 to give the Commissioners for Her Majesty’s Revenue and Customs discretion in determining the amount of any further payments of tax credit where an award of tax credit is amended.

Regulation 16 omits a provision which is now spent as a consequence of regulation 14(2) of these Regulations.

A full regulatory impact assessment has not been produced for this instrument as no impact on the private or voluntary sectors is foreseen.