CPAG in Scotland Tax Credits Project: Factsheet 20

Tax Credits for People from Abroad

Introduction
Present and ordinarily resident in the UK
Children of European nationals
Couples
Foreign income
Going abroad
Persons subject to immigration control
Couples – one member is subject to immigration control
Children subject to immigration control
Asylum seekers and refugees
Special cases
Further information and advice

Introduction

There are two types of tax credit; child tax credit (CTC) and working tax credit (WTC). You can qualify for CTC if you are responsible for children whether or not you are in work. You can qualify for WTC if you are working at least 16 or 30 hours per week, depending on your circumstances. See Tax credits – the basics for more information. Tax credits are administered by Her Majesty’s Revenue and Customs, referred to as the Revenue in this leaflet.

This leaflet explains how people who have recently come to live in the UK can qualify for tax credits. To qualify for tax credits you must meet certain residence, presence and immigration conditions. There are special rules for European nationals, asylum seekers, refugees and persons subject to immigration control. The rules are complex, so specialist advice may be required in some cases.

Present and ordinarily resident in the UK

To qualify for WTC and CTC you must:

• be present in the UK. You may count as present during some temporary absences such as holidays – see Going abroad below.
• be ordinarily resident in the UK. You are ordinarily resident if there is a degree of continuity about your residence so that it can be described as settled. So, you could count as being ordinarily resident even if you spend some time outside of the UK, as long as your residence in the UK is settled. Some people are treated as ordinarily resident under European Union (EU) law – see European nationals below.
• (for CTC only) have the ‘right to reside’ in the UK– see European nationals below.

European nationals can claim tax credits. For CTC only, you must have the ‘right to reside’ in the UK. The following groups generally have the right to reside:

• Workers (for Bulgarian and Romanian nationals, your work must usually be authorised by the Home Office, or you must have completed 12 months authorised work). Your work must be ‘genuine and effective’ but there is no set minimum of hours. If you are on maternity leave, you are still a worker. If you are unable to work due to temporary illness, you may still qualify as a worker.
  
  
• Former workers – people who were working in the UK but are now unable to work due to permanent incapacity or have reached pension age or taken early retirement. You must have been living in the UK for two years before permanent incapacity. If your permanent incapacity is due to industrial injury, you may qualify sooner. For retirement, you must have been living in the UK for three years and working for at least one year.
  
  
• Jobseekers (except for Bulgarian and Romanian nationals unless you have first completed 12 months authorised work) – you must usually be claiming jobseeker’s allowance.
  
  
• Self-employed people – although not a legal requirement, in practice, you will be expected to register as self-employed with the Revenue.
  
  
• Self-sufficient people – you must have sufficient resources to avoid becoming a burden on the UK social security system
  
  
• Students – you must have comprehensive sickness insurance and have sufficient resources to avoid becoming a burden on the UK social security system.
  
  
• Family members of persons with the right to reside. Family member means partner and children under the age of 21, dependent parents/grandparents, and can include older children and extended family members who are dependent.
  
  
• Main carer of an EEA worker’s child in school. This may apply if the child was in the UK and one of his/her parents is an EEA national who was legally working in the UK. The child must have entered the UK compulsory education system (not pre-school) while the working parent was living in the UK. It does not matter whether the parent was living with the child or working at the time that the child entered education. This right can also apply to the main carer even if they are not an EEA national.
  
  
• People who have been exercising European Treaty rights in the UK for 5 years – this means that you must have been in one or more of the above categories for at least 5 years. This permanent right to reside is only lost through absence of more than two years.

Remember, the right to reside is only required for CTC. The right to reside requirement applies to CTC for all claimants. UK citizens and people who are not European nationals and have permission to enter or remain in the UK under immigration rules also have a right to reside without having to be in one of the above groups.

To qualify for WTC, you must be working 16 or 30 hours a week depending on your circumstances. See Tax credits – the basics for more information. While there is no right to reside requirement for WTC you do need to be ordinarily resident. You are treated as ordinarily resident in the UK for WTC while exercising European Treaty rights as a worker or if you have the right to reside.
You have the right of appeal against a Revenue decision that you do not have the right to reside. For more detailed information on the right to reside, seek specialist advice.

See Children of European nationals below if you are a European national and your children are in another EEA country.

Children of European nationals

To claim CTC, you must normally be living with the child. However, the Revenue allows an exception to this rule under European law if you are a European national and your children are in another EEA country – see box below:

Couples

Your tax credits claim must be made either as a single person or as a couple. You are a couple if you are married or in a registered civil (same-sex) partnership, or if you are living together as if you are married or registered civil partners. If you are part of a couple you must make a joint claim, including both partners’ details on the form. It is very important to get this right when you claim and to report any changes. You stop being a couple if you are separated under a court order or if the relationship has ended.

According to the Revenue leaflet WTC/FS5, as shown in the box above, you should still claim as a couple if you work in the UK and your partner and children are in another EEA country. But if your partner is outside the EEA, you need to make a single claim unless your partner is only away for a short time – see Going abroad below. Make sure that you report your (and your partner’s) circumstances to the Revenue and get independent advice if you are unhappy with its decision.

Foreign income

When you claim tax credits, you are asked to provide details of your taxable income in the previous tax year. This applies to you even if you were not living in the UK in the previous tax year. You must include income such as earnings and pensions from when you were living in another country. You are asked to declare your income in pounds sterling, even though you may have received it in another currency. To help you calculate this, the Revenue has the exchange rates from 1989 for all world currencies on its website: www.hmrc.gov.uk/exrate/index.htm

Certain types of income are disregarded – if you are not sure whether to include foreign social security benefits, contact the Revenue for advice.

Going abroad

As long as you are ordinarily resident in the UK (and your absence is unlikely to exceed 52 weeks) you can continue to qualify for tax credits for:

• the first 8 weeks of any temporary absence or
• the first 12 weeks of any temporary absence connected with medical treatment for you or a family member, or bereavement of a relative.

Going abroad for more than 8 (or 12) weeks is a change which you are required to report to the Revenue. Failure to do so can result in a penalty of up to £300 as well as an overpayment, which you would be asked to repay.

This applies to both members of a couple, so if your partner goes abroad for more than 8 (or 12) weeks, you are no longer entitled as a couple and must claim as a single person. You must then reclaim as a couple when your partner returns to the UK.

However, you may continue to claim as a couple if you are a European national working in the UK and your partner and children are in another EEA country – see Children of European nationals above.

If you are working in another EEA country or Switzerland, you may be able to get that country’s equivalent allowances for children, even if your child or children stay in the UK.

Persons subject to immigration control

You are a person subject to immigration control if you are not a European national and you require permission to enter or remain in the UK but do not have it, or you are subject to a ‘no recourse to public funds’ restriction or a maintenance undertaking. If you are a person subject to immigration control you are generally excluded from tax credits. Tax credits are included on the Home Office list of public funds, so claiming tax credits could jeopardise your immigration status (but see below if you are part of a couple).

Couples – one member is subject to immigration control

If you are married or in a registered civil (same-sex) partnership, or living with someone as if you are married or registered civil partners, you must claim tax credits as a couple. If your partner is a person subject to immigration control, you must still claim tax credits as a couple and include their details on the claim form. The requirement to provide a National Insurance number is waived for a partner who is subject to immigration control and requires leave to enter or remain in the UK but does not have it. . However, if you have a partner who is a person subject to immigration control and you do not have children, you will not be entitled to the couple element of WTC. Where a couple are entitled to tax credits, the person subject to immigration control will not be treated as having had recourse to public funds by the Home Office so their immigration status will not be jeopardised.

Children subject to immigration control

For CTC, the presence, residence and immigration rules apply to the adult who claims, not the child. This means that if the child you are responsible for is subject to immigration control, you can still claim for the child as long as they are normally living with you.

Asylum seekers and refugees

You are an asylum seeker if you are from outside the EU and have applied to the UK for protection due to a genuine fear of persecution in your home country. Asylum seekers are subject to immigration control and are generally excluded from tax credits. You are given financial support by the Home Office under a separate system. However, once a positive decision is made on the asylum application granting permission to stay in the UK, you are no longer an asylum seeker and are usually given refugee status, humanitarian protection or discretionary leave to remain.

People with refugee status, discretionary leave to remain or humanitarian protection are entitled to claim tax credits and are treated as ordinarily resident. This applies even if your immigration status is time limited, as long as you apply for an extension or indefinite leave to remain before it expires. If you have refugee status, (you must have been recognised under the UN 1951 Geneva Refugee Convention) you can apply for tax credits to be backdated to the date of your asylum application. In practice, as the amount of tax credits is reduced by the amount of asylum support received, most people are unlikely to receive any backdated tax credits. However, in some cases asylum support works out less than tax credits so backdating may be worth pursuing if any of the following were included in your claim during the backdating period:

• a baby under one
• a qualifying young person aged 16-19
• a child who is in receipt of DLA or registered blind, or
• an asylum seeker with permission to work, working sufficient hours to qualify for WTC

You must claim tax credits and request backdating within three months of you or your solicitor receiving notification of your refugee status.

Special cases

If you are from Croatia, Macedonia or Turkey and are “lawfully present” in the UK, you may be eligible for WTC only.

If you are from Algeria, Morocco, San Marino, Tunisia or Turkey and are “lawfully working” in the UK, you may be eligible for CTC only, but you must also show that you have a right to reside in the UK under immigration rules.

If you have been subject to a maintenance undertaking for more than five years, or your sponsor has died, you may be eligible for tax credits.

If you are subject to immigration control and receive financial support from abroad, but this has been temporarily disrupted, you may be able to get tax credits for up to 42 days.

Further information and advice

CPAG in Scotland Tax Credits Project summary webpages

Child Poverty Action Group in Scotland
0141 552 0552 advice line for advisers on benefits and tax credits,
Monday to Friday 10am to 12 noon

Email: advice@cpagscotland.org.uk
email advice for advisers on benefits and tax credits

Website: www.cpag.org.uk
for more tax credit factsheets from CPAG in Scotland

CPAG publishes the Welfare Benefits and Tax Credits Handbook, a comprehensive guide to benefits and tax credits for claimants and advisers.

CPAG in Scotland’s advice line is only for advisers. If you are having problems with your own tax credit or benefit claim and are in need of advice you should contact your citizens advice bureau or other local welfare rights service.

HM Revenue and Customs
Tax Credit Helpline 0845 300 3900
(textphone 0845 300 3909)

The Revenue offers a free interpretation service to claimants who do not have English as a first language.

Website: www.hmrc.gov.uk

The Revenue’s Race Equality scheme (published on its website) commits to eliminating unlawful discrimination and promoting equality of opportunity and good relations between people of different racial groups.

© Child Poverty Action Group, April 2011

Child Poverty Action Group is a charity registered in England and Wales (registration number 294841) and in Scotland (registration number SC039339). Company limited by guarantee registered in England (registration number 1993854). Registered office: 94 White Lion Street, London N1 9PF

CPAG in Scotland’s Tax Credit Project is funded by the Scottish Government.

This factsheet was last updated April 2011.