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Your children could be saving you money. Don't miss out on the new tax relief of £10 a week.

If you’re wondering how much it will cost this Bank Holiday to take the kids to the theme park and cinema and eat out with them, are you sure that they can’t pay for themselves? I am not suggesting you dock their pocket money (unless they are really bad)! But if you have at least one child under 16 living at home with you and you pay tax then you could get £10 a week from the Government – backdated to the start of April.

The money comes from the new children’s tax credit. It began in April but the Inland Revenue says that up to a million parents who could claim it have still not done so. It is easy to claim and your tax is cut by a straight £10 a week.

To qualify you need to pay tax and have a dependent child living with you who is under 16. As long as their 16^th birthday is 6 April 2001 or later you can still get the credit. Only one credit is paid regardless of the number of children – or parents! If you live as part of a couple, it is the partner who earns most who has to claim. If one of you earns over £33,935 the credit is reduced. And if one of you earns more than £41,735 it will not be paid at all. But it is the income of the higher earner – not the joint income – that counts. So you can have a joint income of nearly £68,000 split evenly between you and still get the credit in full.

Some grandparents have contacted Money Box and asked if they can get the children's tax credit. Yes they can – so can other relatives – if they have a dependent child under 16 living with them. But some older grandparents will find they are better off not to. Married couples where one partner was born before 6 April 1935 can still pay less tax through married couple's allowance – which was abolished for younger people last year. But they cannot get married couple's allowance AND children's tax credit. For most of these couples, married couple's allowance is worth more than children's tax credit. But if the husband’s income is more than around £21,000 the married couple's allowance is reduced to less than the amount of the children's tax credit, so he should claim that instead.

There is more money waiting to be claimed by many unmarried couples and single parents. If you did not know about children's tax credit, the chances are that you did not claim another allowance in earlier years. People with dependent children who were not part of a married couple – so no married couple's allowance was claimed – used to be able to claim extra tax relief called additional personal allowance – or APA. It was worth up to £285 a year. Although APA was abolished from April 2000, it can still be claimed for years before that right back to 1995/96 – see table. The child you looked after did not have to be under 16 – they just had to be dependent on you and in full time education in the year you claim for.

Employees should get a form by phoning the Inland Revenue helpline – 0845 300 1036 –open seven days a week 8am to 10pm. Or check out the website www.inlandrevenue.gov.uk/ctc/index.htm and print the form yourself – or if it rains on Monday, get the kids to do it! Your tax code will be adjusted to cut the tax deducted from your pay – you will know it has come through by checking for the letter H at the end of your tax code.

Self-employed people will claim children's tax credit for 2001/02 when they fill in the self-assessment form sent out in April 2002.

To claim additional personal allowance for years from 1995/96 to 1999/00 contact your local tax office.

12 May 2001

e-mail Paul Lewis on paul@paullewis.co.uk