[2025] UKUT 166 (AAC)

HMRC makes a further argument that it does not fall within the definition of “Minister of the Crown” and therefore childcare support under tax credits is not “other relevant childcare support” for the purposes of s.13 of the 2014 Act.

The claimant accepted that HMRC does not fall within the definition of “Minister of the Crown”, but he submitted that tax credits (including the childcare element) are still support “provided” by a Minister of the Crown, as the definition of that term includes the Treasury.

HMRC does of course administer the tax credits system; however the Treasury has ultimate responsibility for the design and policy decision-making of the system. That is exemplified by the fact that all substantive regulations for tax credits are made by the Treasury and not HMRC, see s.65(1) of the Tax Credits Act 2002 (“the TCA 2002”).

HMRC have also argued that “other relevant childcare support” referred to in s.13 of the 2014 Act does not include the childcare element of tax credits.

They assume that those TFC claimants who are in receipt of an ongoing award of tax credits are likely to be in receipt of the childcare element and as such s.30 of the 2014 Act would never bite if “other relevant childcare support” includes the childcare element of tax credits.

The claimant disagreed with that assumption. In fact, in all situations where it is beneficial for a claim to be made for TFC despite an ongoing entitlement to tax credits, there will not be entitlement to the childcare element of tax credits.

That is because it is only worthwhile to claim TFC (thereby ending entitlement to tax credits) where the tax credits entitlement is very low – below the potential support provided by TFC, which is a maximum of £2,000 per annum.

As per the Tax Credits (Income Thresholds and Determination of Rates) Regulations 2002 (“the TCR 2002”), the childcare element is tapered away before Child Tax Credit is reduced. The child element of Child Tax Credit is well in excess of £2,000.

This means that any TFC claimants with an overall tax credit entitlement of under £2,000 will not be receiving any childcare support through tax credits.

Even where a claim is made for TFC despite it not being worthwhile, there are still many situations where there is no entitlement to a childcare element. That could be because household income is high enough for the childcare element to be tapered to nil, or where a claimant does not currently make any use of childcare, but is claiming TFC for the coming term. (A TFC claim must be made prior to the start of the term.)