UK Social Security and Child Support Commissioners' Decisions

[2004] UKSSCSC CSG_607_2004 (03 December 2004)

THE SOCIAL SECURITY COMMISSIONERS

Commissioner's Case No: CSG/607/04

SOCIAL SECURITY ACT 1998

APPEAL FROM THE APPEAL TRIBUNAL UPON A QUESTION OF LAW

COMMISSIONER: L T PARKER

Appellant: Respondent: Secretary of State for Work and Pensions

Tribunal: Glasgow Tribunal Case No:

DECISION OF SOCIAL SECURITY COMMISSIONER

Decision

1. I find no error of law in the decision of a tribunal sitting in Glasgow on 10 June 2004 (the tribunal). The tribunal's decision therefore stands.

The issue

2. The appeal concerns entitlement to a "Sure Start Maternity Grant" (maternity grant). Under regulation 5(1)(a) of the Social Fund Maternity and Funeral Expenses (General) Regulations 1987 (the maternity regulations) entitlement to the maternity grant arises where:-

"The claimant or the claimant's partner has, in respect of the date of the claim for Sure Start Maternity Grant, been awarded either income support state pension credit, income-based jobseeker's allowance, working tax credit where the disability element or the severe disability element of working tax credit….is included in the award or child tax credit payable at a rate higher than the family element;" (my emphasis)

3. Under regulation 3 of the maternity regulations (the interpretation regulation), the following definition is given to "family element":-

"'family element' means in a case where any child in respect of whom child tax credit is payable is under the age of one year, the amount specified in regulation 7(3)(a) of the Child Tax Credit Regulations 2002 or in any other case, the amount specified in regulation 7(3)(b) of those Regulations".

4. The issue in the present case is the meaning of the words in regulation 5(1)(a) above emphasised in bold.

The facts

5. These are not in dispute. The appellant claimed a maternity grant on 4 September 2003. She is married and lives with her husband and her daughter born on 22 July 2003.
6. The notes accompanying the application for the maternity grant include the following advice:-

"You may be able to get a sure start maternity grant if

you or your partner are getting

....

- Child Tax Credit at a rate higher than the family element. From April 2003 to April 2004 this means a Child Tax Credit rate of more than around £10.45 a week, or £20.90 a week if you have a baby under one…."

7. The appellant was awarded a child tax credit of £777.78 for the period 20 July 2003 to 5 April 2004; this was paid by a first payment of £178.80, a second payment of £21.45 and thereafter weekly payments of £21.39.

The tribunal decision

8. It was argued on behalf of the appellant by her representative (the representative) that as the payments are £21.39 for each weekly payment, which is more than the rate of £20.90 a week stated in the notes, she must be receiving child tax credit at a rate higher than the family element.
9. The tribunal rejected the argument:-

"……

The Presenting Officer referred to the Child Tax Credit Regulations as showing the Child Tax Credit element for a child under one which was the situation here of £1,090 and that this is an annual figure. He stated that using the figure of £777.78 this equates to a daily rate of £2.98 which is the rounded figure which is equivalent to an annual figure of £1,090.

5. I have considered carefully the submissions that were made before me at the hearing and also the documentation before me. It appears to me that the Appellant and her representative are misunderstanding the difference between the award that has been made and the method of payment of that award. In deciding whether or not the Appellant is entitled to a Sure Start Maternity Grant I have to be satisfied that the Child Tax Credit is payable at a rate higher than the family element. I am not satisfied that this is the case. The Child Tax Credit award is £777.78 and this for the period 20^th July 2003 to 5^th April 2004. This is not a full tax year. When this figure is recalculated on a full tax year basis, it is clear that the figure that is arrived at is £1,090. It is therefore the case that the Appellant's award is not paid at a rate higher than the family element. What is clearly confusing the Appellant here is the fact that the payment rate is at a rate marginally higher than the rate referred to in the Claim Form…... The rate was £20.90 a week, the Appellant was receiving £21.39 every week, an increase of 49 pence a week but as the Application Form itself states the figures are "around", clearly therefore the £20.90 is not an exact figure but merely a guideline for applicants.

6. Accordingly, therefore, the Appellant's appeal must fail as she has not established that she is receiving Child Tax Credit at a rate higher than the family element. It should be noted though that the initial submissions and documentation in this case are not at all clear and certainly do not make it clear to Appellants why it is or indeed how it is that their claim has been unsuccessful. It appears to me that this documentation could and should be written in a much more transparent and easier to understand format as the present format will simply generate more misconceived appeals."

Appeal to the Commissioner

10. It is argued by the representative on the appellant's behalf that what matters is how she was paid and the facts show that she was paid at a weekly rate higher than that given in the notes so that she must be being paid at a rate higher than the family element.
11. The Secretary of State does not support the appeal. However, I do not find his submission easy to understand. Moreover he refers to an amendment to the definition of "family element" in the maternity regulations which is incorrect; the statutory instrument to which he refers (the Social Security (Working Tax Credit and Child Tax Credit) (Consequential Amendments) (No. 3) Regulations 2003, SI 2003 No. 1731) amends different regulations and not the maternity regulations.
12. It is more straightforward to set out basic principles, in particular the concepts underlying entitlement to the maternity grant and the structure of the child tax credit scheme.
13. Entitlement to the maternity grant is restricted to those in receipt of means test benefits. Child tax credit is unusual in that there is eligibility at a much higher level of income than is usual with means tested benefits. This is the rationale behind restricting entitlement to a maternity grant only to those in receipt of child tax credit at a high level, so that this category of claimant equates in resources with other groups in the list set out in regulation 5(1)(a) of the maternity regulations.
14. Entitlement to a child tax credit tax award is calculated by reference to a whole tax year as the starting point. The whole tax year from 6 April 2003 to 5 April 2004 contained 366 days. A claimant can only receive the full year's rate if a claim is made on the first day of the tax year; if (as is usual) a claim is made during the tax year then the award is a proportion of what would be available if the claim was for a whole tax year and is based on the number of days counted from the date on which the claim is made and ending at the end of the relevant tax year.
15. The maximum amount of child tax credit to which a claimant is entitled is calculated by adding together each of the 'elements' applicable in the claimant's personal circumstances. Regulation 7 of the Child Tax Credit Regulations 2002 sets out the amount of each element at the yearly rate. The elements so set out in regulation 7 are the "family element" (in the applicable tax year £1,090 if, as here, the family includes a child under one) and a "child element" of £1,625 (increased to £3,840 if the child is disabled or £4,730 if the child is severely disabled).
16. Under regulation 8 of the Tax Credits (Income Thresholds and Determination of Rates) Regulations 2002, the above annual amounts are adjusted where entitlement to child tax credit is for a period of less than a year and a claimant then only has potential entitlement to the correct proportion of the annual maximum aggregate. This is done by dividing the statutory annual rate for each element by the number of days in the tax year, rounding that figure up to the nearest penny and then multiplying the figure produced by the actual number of days covered by the award in issue. The result is a claimant's maximum entitlement for the relevant period.
17. But child tax credit is means tested. The claimant's income therefore has to be compared with the threshold. The first threshold for child tax credit purposes is set out in regulation 3 of the Tax Credits (Income Thresholds and Determination of Rates) Regulations 2002 and is £13,480. Again, this is an annual figure, so that if the award does not extend for the whole tax year then the threshold figure used in the claimant's case is one relative to the annual figure; the statutory annual amount also must be divided by the number of days in the current tax year, this figure is multiplied by the number of days covered by the award and the amount rounded up to the nearest penny. This is then the claimant's threshold against which income is compared.
18. Because it is a means tested benefit, child tax credit is only available at the potential personal maximum amount (as determined on the proportionate basis which the number of days in the award period bear to the whole tax year) when income is less than the applicable threshold (determined on a similar ratio basis). If the claimant's income exceeds the threshold figure then the maximum applicable child tax credit is reduced by 37 pence in the pound for every pound over the claimant's appropriate threshold.
19. As already noted, an award of child tax credit at its maximum level involves both a "family element" for the claimant and an "individual element" for each child (the latter sum being higher if the child is either disabled or severely disabled). The different elements of a claimant's maximum tax credit are tapered away for excess income in a set order such that the child elements, (including higher premium if appropriate), are reduced first; the family element of child tax credit is not tapered away at all until the claimant has an income in excess of £50,000 a year at which stage the withdrawal rate changes to £1 in every £15 if, as will be the normal case, there is only the family element left.
20. It will thus be seen that, taking a broad view, a claimant who only receives the family element of child tax credit has a higher income than one who receives a child element in addition. This is why eligibility to the maternity grant is restricted to those who are awarded child tax credit involving both an "individual child element" as well as a "family element". It demonstrates that the claimant's income is very low and on a par with other categories listed in regulation 5(1)(a) of the maternity regulations.
21. The regulations cause confusion because they use the words "amount" and "rate" interchangeably; the latter though can be either a synonym for the former or it may denote the ratio of one quantity to another. However, the context makes clear that whichever term is used, what is given in the regulations, (whether it is the amount of an element or the amount of a threshold), is a sum set at a yearly rate which is then adjusted on a proportionate daily basis if the relevant period of the award is less than a whole tax year (as is almost inevitable).
22. The guidance notes are badly worded as the Secretary of State now concedes and have apparently been altered. However, although it is unfortunate if the claimant was thus misled, I am obliged to apply the legal rules. In any event, the wording always implied that the figures used were approximate only.
23. The family element for a whole tax year would usually be £20.90 a week. In fact, because of the process of rounding up, an annual maximum amount may be more than the statutory figure. When this is reduced to a daily rate and applied to the number of days in the appellant's award it is clear that her child tax credit award has only the family element in it and no individual child element. How her final sum was apportioned over the weeks in her award in terms of actually paying it to her is irrelevant; what matters is what was "payable" in the award, which is the figure she is entitled to be paid, calculated on a daily basis. The total sum paid and payable to her is such that she only ever received a daily rate equivalent to the family element and without inclusion of any money relating to an individual child element. The family income is thus not at a level which makes her eligible for a maternity grant.

Summary

24. Having regard to the above, no error in law has been demonstrated in the tribunal's approach and my decision is as set out at paragraph 1 above.

(Signed)

L T PARKER

Commissioner

Date: 3 December 2004