November 23rd, 2008
HOW TOMORROW’S P.B.R. SHOULD CUT BACK POVERTY
Whatever other help to people on low incomes Alistair Darling may have in mind for tomorrow’s Pre-Budget Report, he should focus on two key objectives.
1 Whilst his raising the personal allowance to £6,035 per year compensated the great majority of 10% tax rate losers, it still left around one million people losing out. These are largely people on the lowest incomes who are neither tax credit claimants nor pensioners over 65, and they are some of the most vulnerable in the current economic downturn. They are still worse off than in the last tax year, and should as a priority be fully compensated now.
2 Tax credits have helped a great many out of poverty, but they can still often trap many who do not take quick enough action to a void being overpaid. There are three areas where alleviation of tax credits debt is now urgently needed from the Chancellor:
(i) Working tax credits are currently lost whenever a person in receipt loses their job or if their hours are reduced. Where the Revenue has hitherto been recovering an overpayment by regular reductions from a person’s continuing award, the claimant is now required to repay within 30 days or reach a deal with the Revenue about the repayment period. The Chancellor should now suspend the requirement to repay in such circumstances when the claimant loses his job until such time that he can start repaying again.
(ii) When a person starts or ends a relationship, they have to make a new claim to align with their new circumstances. If they fail to do so, or do not do so in time, they are currently obliged to pay back all the credit paid to them after their relationship changed. Worse, the overpayment is not reduced by the amount of credit which they would have received if they had made a new claim in time. Until May 2007 the Revenue did permit the setting-off of this amount of credit, and the Chancellor should now use this opportunity to reinstate it.
(iii) A very large number of tax credit claimants are still being penalised by disputed overpayments from the period when the tax credits system began, when overpayments of thousands of pounds were caused by the Revenue’s own mistakes. The Chancellor should now pragmatically write off all outstanding overpayment debt from the first 4 years of tax credits which was caused or exacerbated by official error.
I have written to the Chancellor asking for these changes to be made as a priority in tomorrow’s Pre-Budget Report.
November 24th, 2008 at 10:54 am
From the day I applied for child credits, the forms were received and accepted it took twelve months for me to be paid out, the reason given shortage of staff. I went into deep debt keeping two grand kids on £125 a week and I had to pay rent and council tax until I had the credits.
what a bloody mess this government have made of everything they do.