The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
New claims for tax credits are no longer possible as they have been replaced by the universal credit for all claimants. Existing claimants 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.
The tax credits legislation makes very little mention of specific anti-avoidance rules. Instead, it refers to ‘notional income’ which is income that is treated as the claimant’s income even though the claimant did not receive it.
For example, these rules apply where claimants:
deliberately get rid of income in order to claim or increase their tax credits
fail to apply for income to which they are entitled
provide a service for low rates of payment
Where you advise a director of an owner-managed company in relation to tax credits, this is a key point. Clients will frequently have established for themselves that drawing minimal income from their company will enable them to increase not only tax credit claims but also give access to other Government support.
There are four different types of notional income that should be considered when looking at a claimant’s tax credit affairs:
claimants treated as having income under the Income Tax Acts
claimants depriving themselves of income in order to secure entitlement
claimants having income available to them on application
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