(1)    These Regulations may be cited as the Tax Credits Up-rating Regulations 2006 and shall come into force on 6th April 2006.

(2)    In these Regulations—

“the Child Tax Credit Regulations” means the Child Tax Credit Regulations 2002;

“the Entitlement Regulations” means the Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002;

“the Income Thresholds Regulations” means the Tax Credits (Income Thresholds and Determination of Rates) Regulations 2002.

(3)    These Regulations have effect in relation to awards of tax credits for the tax year beginning on 6th April 2006 and subsequent tax years.

(1)    The Child Tax Credit Regulations are amended as follows.

(2)    In regulation 7(4) (individual element)—

(a)    in sub-paragraph (a) for “£3,975” substitute “£4,115”;

(b)    in sub-paragraph (b) for “£4,895” substitute”£5,060”;

(c)    in sub-paragraph (c) for “£1,690” substitute “£1,765”;

(d)    in sub-paragraph (d) for “£3,975” substitute “£4,115”;

(e)    in sub-paragraph (e) for “£4,895” substitute “£5,060”;

(f)    in sub-paragraph (f) for “£1,690” substitute “£1,765”.

(1)    In regulation 20(2) of the Entitlement Regulations (maximum rate of the child care element of a working tax credit), for “70 per cent” substitute “80 per cent”.

(2)    For the Table in Schedule 2 to the Entitlement Regulations substitute the Table set out in the Schedule to these Regulations.

(1)    In regulation 3(3) of the Income Thresholds Regulations (first income threshold for those entitled to child tax credit) for “£13,910” substitute “£14,155”.

(2)    In regulation 5 (amounts prescribed for the purposes of section 7(3)(a) and (b) of the Act) for “£2,500” substitute “£25,000”.

(3)    In regulation 8(3) (determination of child tax credit) for “£13,910” (threshold amount shown at step 4) substitute “£14,155”.

Gillian Merron

Joan Ryan

Two of the Lords Commissioners of Her Majesty's Treasury

29th March 2006

Section 41 of the Tax Credits Act 2002 (c 21) requires the Treasury, in each tax year to—

(a)    review the amounts referred to in subsection (2) of that section,

(b)    prepare a report of each review; including a statement of what each of the amounts would be if it had fully retained its value; and

(c)    publish the report and lay a copy of it before each House of Parliament.

The Treasury's report of the review in respect of the tax year 2005–06 was published and laid before Parliament on 13th February 2006.

In consequence of the review the Treasury have made these Regulations, prescribing increases in certain of the sums required to be reviewed under section 41.

Regulation 1 provides for the citation, commencement and effect of these Regulations, and defines some terms used in them.

Regulation 2 amends regulation 7(4) of the Child Tax Credit Regulations 2002 (SI 2002/2007), increasing the maximum rate of the elements of a child tax credit.

Regulation 3 increases the maximum rate of the child care element of working tax credit. The Schedule amends Schedule 2 to the Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002 (SI 2002/2005) by substituting a new Table prescribing the maximum rates for the elements of working tax credit other than the child care element.

Regulation 4 increases the first income thresholds for those entitled to child tax credit in regulation 3(3) of the Tax Credits (Income Thresholds and Determination of Rates) Regulations 2002 (SI 2002/2008) and the threshold amount shown at step 4 in regulation 8(3) of the above mentioned regulations. It also increases the amount prescribed for the purposes of section 7(3)(a) and (b) of the Tax Credits Act 2002 from £2,500 to £25,000.

These Regulations impose no new costs on business.