How have Tax Credits been for you?

jellyhead

i've read somewhere that overpayments can also affect your housing and CT benefit. it seems even more important that the people on those benefits aren't messed about so putting the easy claimants of just the £10 per week back on to the old system would reduce the burden on the tax credits system. i don't know why they included people like my hubby in the tax credits sytem anyway. grumble grumble. i don't take much of an interest in politics - are any of the parties proposing anything regarding the tax credits sytem? or the csa? both systems let down the families most in need, sorting them out could be a votes gainer.

irs101

There were 3 main reasons why the new tax credit system was introduced.

1. To create a single system of support
There were previously 3 different tax credits - WFTC/DPTC, Children's and Childcare. They wanted to bring it into one. This has been successful to the extent that the claim rate has rocketed compared to the old system because people only have to apply once. Lots of people didn't claim the Children's or Childcare Tax Credit they were entitled to. Just look at the statistics, the number of people benefiting is phenominally high. Also, the new system stops the to and froing of the child support between tax credits and IS for those who go in and out of work. The downsides........:mad:

2. The old system was unfair
This especially applied to the Children's Tax Credit. A single earner couple earning £30K got a different amount to a dual earner couple earning £15K each.

3. A more responsive system
It's been recognised above that the fixed nature of WFTC awards, while simpler, can lead to fraud and problems when circumstance change mid-award. This system is designed to respond to changes in circumstance quickly, so that if your income drops you can immediately get more help. But there are many flaws in this, as we well know.

Not trying to say that tax credits are brilliant, but in terms of a balanced argument, I think it's important to recognise that some of the motives were sound and that, overall, the system as got a lot more money to a lot more people than the previous system could ever have.

irs

fairenoughclough

irs101 wrote:

There were 3 main reasons why the new tax credit system was introduced.

1. To create a single system of support
There were previously 3 different tax credits - WFTC/DPTC, Children's and Childcare. They wanted to bring it into one. This has been successful to the extent that the claim rate has rocketed compared to the old system because people only have to apply once. Lots of people didn't claim the Children's or Childcare Tax Credit they were entitled to. Just look at the statistics, the number of people benefiting is phenominally high. Also, the new system stops the to and froing of the child support between tax credits and IS for those who go in and out of work. The downsides........:mad:

2. The old system was unfair
This especially applied to the Children's Tax Credit. A single earner couple earning £30K got a different amount to a dual earner couple earning £15K each.

3. A more responsive system
It's been recognised above that the fixed nature of WFTC awards, while simpler, can lead to fraud and problems when circumstance change mid-award. This system is designed to respond to changes in circumstance quickly, so that if your income drops you can immediately get more help. But there are many flaws in this, as we well know.

Not trying to say that tax credits are brilliant, but in terms of a balanced argument, I think it's important to recognise that some of the motives were sound and that, overall, the system as got a lot more money to a lot more people than the previous system could ever have.

irs

1. Claims have rocketed ...... because you didn't have to apply for Married man's tax allowance, which child tax credit has replaced in a roundabout way, for those of us with children.

2. Why should a single earner earning £30k and dual earners earning £15k each get the same credit, their childcare needs are different!

3. If it's designed to work quickly, why does it use last years earnings to work out the credit award ?


It would simplify things dramatically for Child tax credit to be abolished and the money spent on increasing Child Benefit for all and the establishment of free nursery places for all.

And all the out of work civil servants could retrain and work in the nurseries !





As for paying out to more people, Married couples without children obviously do not qualify for CTC, where before they would have qualified for Married Man's Tax Allowance, so perhaps that's not true either.

One thing I will say, many more people have to fill in intrusive documentation, which is basically a double check of information that could be gathered from other government sources!

irs101

1. Claims have rocketed ...... because you didn't have to apply for Married man's tax allowance, which child tax credit has replaced in a roundabout way, for those of us with children.

True. But the Children's Tax Credit which CTC directly replaced had very poor take-up. Plus, this Government established the principle that they would support families with children, not married couples - much as I'm sad to say it, being a married childless person myself.

2. Why should a single earner earning £30k and dual earners earning £15k each get the same credit, their childcare needs are different

They are, which is one reason why it was unfair. A £40K earner would get the relief at a higher rate than two £20K earners. But anyway, that is what the childcare element is for - and has been made more generous under this scheme and with a massive increase in take-up.

3. If it's designed to work quickly, why does it use last years earnings to work out the credit award ?

That is precisely the point. By using last years income you can quickly calculate a provisional amount of entitlement. You have the right not to use last years figure if you think your income has change substantially.

It would simplify things dramatically for Child tax credit to be abolished and the money spent on increasing Child Benefit for all and the establishment of free nursery places for all.

It would be simple, but the worst off would lose the most. There isn't enough money to make that sort of money available to everyone regardless of income.

As for paying out to more people, Married couples without children obviously do not qualify for CTC, where before they would have qualified for Married Man's Tax Allowance, so perhaps that's not true either.

You're not comparing like with like. That is a relief system, this is a benefits system by another name. While people received the (relatively minor) tax relief, take-up rates for Family Credit were quite poor, meanng that the worst off weren't getting what they were entitled to.

One thing I will say, many more people have to fill in intrusive documentation, which is basically a double check of information that could be gathered from other government sources!

I don't see how the information could be got from elsewhere. While IR hold information on numbers of children, it doesn't know your income until much later - much too late for somebody who has lost their job. They don't know at all who your partner is, your childcare costs, number of hours worked, any disabilities.....

Spendless

I don't think its true that you didn't have to apply for married mans allowance and the childrens tax credit that replaced it.

We married in June 1999 and had to inform hubbys employers wage dept in order to claim the then married mans allowance. IIRC this allowance ended April 2000 and was replaced in April 2001(so there was a year without anything)just for people who had children, again i remember applying. This stopped April 2003 as the current system came in.

It's hard for me to comment on my own circs cos CTC co-incided with hubbys pay rise but my sister who is only entitled to the family element said all that happened is her husbands wage was £40 down as £40 appeared in her bank account from child tax credit.

So i take what jellyhead has said there must be a lot of admin for people who are only entitled to the £547.50 p.a.

BTW - i'm not with why one person on £30,000 would have differnt childcare needs to 2 people on £15,000 could you explain further please.

Even though my claim is simple i've had problems getting thru when i had daughter to add her onto claim and i totally missed the question about not returning last years form if your circs hadn't changed, it's only thanks to this site and Ted telling me about a radio show that i realised my mistake.

I don't really understand why people aren't allowed to see a formula so that they could check with their award is correct or not.

irs101

So i take what jellyhead has said there must be a lot of admin for people who are only entitled to the £547.50 p.a.

Around 2 million families, out of a total of 6 million benefiting from TCs, are receiving the family element of CTC only (£545.34 or £547.50, depending on whether it is a leap year or not). While it's an attractive proposition to take these out of the system, there isn't a single threshold at which families become entitled to the family element only. In fact there are an infinite number of thresholds, and it all depends on your individual circumstances. So you would have to change the system completely - partcularly make the Childcare Element a standalone tax credit again - to make it work.

I don't really understand why people aren't allowed to see a formula so that they could check with their award is correct or not.

Because it's so damn complicated. Even the entitledto website, which I really like, can only tell you your entitlement assuming that your circumstances don't change mid-year. The main problem is that as soon as your circumstances change, you have to effectively recalculate your entitlement in previous months as well as in the coming months. Trust me, it's a nightmare.

irs

fairenoughclough

irs101 wrote:

Because it's so damn complicated.



Trust me, it's a nightmare.

irs

Finally something we agree on !

:eek:

fairenoughclough

Spendless wrote:

I don't think its true that you didn't have to apply for married mans allowance and the childrens tax credit that replaced it.

You only had to register for MMTA, simple process.


BTW - i'm not with why one person on £30,000 would have differnt childcare needs to 2 people on £15,000 could you explain further please.

Sorry, assumes one person works earning £30,000 and partner has home and childcare responsibilities.

irs101

Finally something we agree on !

Not sure it's that surprising . I agree with elements of what most people say on this board.

I just have a different perspective from most people on this board. I don't receive tax credits and never have, so I'm not scarred by the experiences that some others have had. I'm not a Labour supporter and I don't work for IR, so there's no need for me to get defensive. I'm not a benefits adviser so I don't see the problem/difficult cases coming through my door all day, every day.

But I do understand the system, the policy underlying it and how the system is performing overall. This government has set out some clear principles on how they believe families should be supported - and this system delivers on many (but not all) of those principles (the fact that I happen to disagree with some of the principles is irrelevant). So I feel that I should balance out the negative experiences of many people on this board - you don't want to discourage people from claiming what they are entitled to because they think that it is always going to end up being a nightmare for them. After all the vast majority of the 6 million families (20 million people) are receiving substantial sums of money from this system without a hitch - but that doesn't make good headlines, does it?

That said, I also know that there are substantial problems with the system, many of which impact heaviest on the most needy in society. So, on the balance of the arguments, I wouldn't actually be against the proposition that the system needs substantial changes making to it.

irs

jellyhead

i agree that it would be a good system if it worked well for everyone claiming. a single system for everything would be good - imagine if there was a form like on the entitledto website where you gave details once and all kinds of spin off benefits were started automatically, that would be great. even more radical, what if the tax credits people (and the CSA) just took details of peoples P60's straight off their own systems, cutting out a lot of admin.

what i'd really like to see though, although it's off topic - married couples having a joint tax allowance! they could decide between them who should claim it (as used to happen with the child tax allowance) and if one parent didn't work then their partner could have the benefit of their tax allowance in their wages. that would be fantastic lol!