Free Prescriptions and Tax Credits (Hansard, 9 January 2003)

§ Lord Hunt of Kings Heath

When new tax credits start from next April—working tax credit and child tax credit—the arrangements for entitlement to help with health costs via tax credits will continue largely the same as now. Families (single people or couples) who gel working tax credit and child tax credit or working tax credit with a disability addition and whose income is below a certain limit will be entitled to full help wit h health costs.

In addition, families who cannot get working tax credit because they do not work 16 hours per week but get child tax credit and whose income is below the same limit will also be entitled to full help with health costs. This will include families whose income support stops when they start to get child tax credit.

The income limit will be based on the family's gross annual income; that is, income for the year before tax and national insurance are taken off. For tax credit awards, which start from April 2003, the income limit will be £14,200 gross per year. This is around the same income level as now after taking account of inflation and 2002 Budget changes to tax and national insurance.

Currently the Inland Revenue sends out a tax credit exemption certificate to families who are entitled to full help with health costs. For awards of the new tax credits, the Prescription Pricing Authority (in Newcastle) will send out exemption certificates on behalf of all the health departments. Families in England, Scotland, Wales and Northern Ireland getting new tax credits who are entitled to full help with health costs will all be sent their exemption certificates by the Prescription Pricing Authority on the basis of information provided by the Inland Revenue.

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The Inland Revenue will include information for the public in a leaflet to be sent out with new tax credit awards.