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Autumn 2003 Newsletter

Tax credits: trouble continues

The introduction of the new Child Tax Credit and Working Tax Credit has not been a happy experience for the Inland Revenue. The system is supposed to focus help where it is most needed, and it has a number of very worthy aims, but it requires a great deal of paper to be filled in and processed. This has led to delays and confusion, and many Revenue staff have had to be taken off their normal duties to clear the backlog. That means that there is now a different backlog elsewhere...

One curios aspect of the rules is that they encourage people to claim even though they are not entitled at the moment, because their income is expected to be too high (above about £60,000 a year). The point is that your entitlement is reconsidered at the end of the tax year, but only if you have submitted a claim. So if your income has dropped in the year and you made a claim at the beginning, you will enjoy the credits retrospectively - if you didn't make a claim, you have missed out. Apparently over 100,000 people have made these "protective" claims.

It will be interesting to see whether the system is revised to make it work better, or whether the Revenue would prefer to have another year of the same before trying to do it differently.