TCM0132380 - Miscellaneous (A to B): Income limits - calculation (Info) - HMRC internal manual - GOV.UK

The tax credits income limit calculation follows five steps.

Income limits are calculated for the year of each award, unless

Taper categories identify what effect family income had on the award for an entitlement period and how sensitive the award is to further income change.

There are five taper categories into which any entitlement period can fall.

Note: From April 2012, the second income threshold has been withdrawn and tapering will continue. This means that plateau cases will no longer occur for claims received on or after

06-04-2012.

No Tapering - neither income limit should be calculated for these entitlement periods.

The rules for other ‘taper categories’ depend on whether the award calculation was based on

Note: From April 2011, the CTC income threshold decreased to £40,000.

Note: From April 2012, the second income threshold of £40,000 has been withdrawn and tapering will continue. This means that plateau cases will no longer occur for claims received on or

after 06-04-2012.

Note: From April 2012, the second income threshold has been removed and tapering will continue. This means that plateau cases will no longer occur for claims received on or after 06-04-2012.

Note: From April 2012, the second income threshold has been removed and tapering will continue. This means that plateau cases will no longer occur for claims received on or after 06-04-2012.

The taper start point, taper end point and income amounts calculated for the entitlement period from the main award calculation allow the income band ‘taper category’ for the entitlement

period to be determined.

However, annual amounts are needed for the Lower Limit and Upper Limit calculations. Where the income limit rule relevant to the income used in the calculation (for example, PY) and income

band taper category for the entitlement period (for example, Taper slope) refers to

The upper and lower income limits calculated for each entitlement period not in the ‘No tapering’ category should then be compared. The final amounts are determined as follows

Conversion is required if the award being calculated is for a previous tax year that was selected for finalisation by auto-renewal.

If conversion is required, it is carried out. Otherwise, the income limits from step 4 are the income limits for the award for the year.