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Tax credit chaos
The new system of Working Tax Credits and Child Tax Credits came into effect on 6 April. Gordon Brown has created something that is genuinely generous to large numbers of people on low incomes and with children. Unfortunately, it has to be claimed in advance - and the
Re venue have been unable to cope with the flood of enquiries and applications.
It remains true that you are unlikely to benefit from any tax credits if your income (combined with your partner's) is greater than £60,000 a year, but you will be due Child Tax Credit of £545 on a combined income of up to about £50,000, and quite substantial amounts can be due to someone who pays for childcare on incomes up to £35,000. In effect, a working couple with childcare costs might find that they are repaid the whole of their income tax on salaries totalling £30,000.
There have been many protests about the difficulties people have had with claims, and the fact that there is a deadline of 5 July for a claim to be backdated to the beginning of the tax year. The Revenue's delays in answering queries and issuing applications may make people miss the deadline, so it may be extended.
Overall, tax credits are a worthy idea, but they have created a mountain of paperwork. If you think you might be entitled to something, it's worth looking at the
Revenue's website, where there is a 'ready reckoner' to help you, and also an online application form. If you apply, please keep a note of what you put on the form, in case there are any queries later - paperless systems are all very well, but records are still very useful!
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This has been so extensively covered in the national as well as the professional press that further comments on the chaos in the system are unnecessary. It is not yet clear whether the Revenue will extend the 5 July deadline - possibly they are waiting to see whether they have managed to clear the backlog by then, and address a problem that they know they have rather than one they expect to have.
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