Child Tax Credit (CTC) was introduced on 6 April 2003 and is administered by the HM Revenue & Customs. It is an income-based credit, meaning that it is subject to 'means-testing'. It is for low-income and middle-income families who are in or out of work and who have responsibility for a child or children under 16, or under 19 if in full-time non-advanced education. It is not payable where a claimant or a partner is under 16 years of age, i.e., both must be aged at least 16.

CTC is payable and assessed on a yearly basis, in line with the tax year, which runs from 6 April to 5 April. It is based on income only and not capital, but 'income' does include actual income, such as interest, from capital. It can be paid in addition to most other benefits, but may, itself, count as income for some other means-tested benefits such as housing benefit and council tax benefit, which might thus be reduced.

The amount of the CTC is made up of a number of elements - a family element, family element (baby), child element, disabled child element and severly disabled child element:

• Those entitled to CTC will get the family element. For the tax year 2008/2009 it is a maximum of £545, but this can be doubled where the family contains a child below one year of age.
• The rate of the child element for each child depends on the circumstances of the child in the family. The basic annual maximum for 2008/2009 is £2,085 and, in addition, there can be a maximum of £2,540 for each disabled child and a further maximum of £980 for each severely disabled child.

Payments of tax credit will be made directly into the claimants' nominated bank, or similar, account. It is awarded for a complete tax year and, while a claim made after April may run only from the date of claim to the end of the tax year, there are circumstances where limited backdating may be applied. It is important to keep the HM Revenue & Customs informed of any change in circumstances which might affect the amount of tax credit due in order to avoid any underpayment or overpayment.

Application packs for CTC are available from HM Revenue & Customs Enquiry Centres, local social security offices, job centres and Jobcentre Plus offices. They can also be applied for on-line at www.hmrc.gov.uk. Further information can be obtained via the tax credit helpline, telephone 0845 300 3900 (Textphone: 0845 300 3909).

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