Entitlement to tax credits

Produced by Tolley
  • (Updated for Budget 2021)
Entitlement to tax credits

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Entitlement to tax credits
  • Migration of tax credits to universal credit
  • Residence rules for tax credit claimants
  • Working tax credits
  • Condition 1
  • Condition 2
  • Condition 3
  • Condition 4
  • Temporary coronavirus (COVID-19) measures
  • Summary
  • More...

Entitlement to tax credits

Migration of tax credits to universal credit

New claims for tax credits are no longer possible as they have been replaced by the universal credit for all claimants. Until January 2021, it was possible for those entitled to severe disability premium (SDP) to make a new claim for tax credits, but SDP claimants are now also being migrated to universal credit.

Existing claimants of tax credits will continue to receive tax credits until they are migrated to the universal credit system. Migration will take place when a change in circumstances is reported.

See the Universal credit guidance note.

Residence rules for tax credit claimants

To be eligible for tax credits, the individual must usually live in the UK ― that is England, Scotland, Wales or Northern Ireland. The UK does not include the Channel Islands or the Isle of Man.

For claims made on or after 1 July 2014, the claimant must have been living in the UK for three consecutive months immediately prior to making the claim. This rule applies equally where the claim is backdated; the claimant must have been living in the UK for three consecutive months immediately prior to that earlier date. However, this three-month rule does not apply to individuals who entered the UK before 1 July 2014 or have UK refugee status. For a full list of exemptions, see the revenuebenefits website.

A claim can continue during short absences from the UK of up to eight weeks a year, or up to 12 weeks where illness is a factor.

The claimant must be present and ordinarily resident in the UK for the period of the claim. Although the term ‘ordinarily resident’ was generally abolished for tax purposes from 6 April 2013, the concept still exists for tax credits. The guidance for tax credit purposes describes this as normally residing in the UK (apart from temporary or occasional absences), and that residence in the UK has been adopted voluntarily and for

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