National Statistics: Tax Credits 2007-08
May 19, 2009 by Scott
Filed under Accountancy News
HMRC has today published National Statistics on finalised tax credit awards for 2007-08.
The statistics show that the level of overpayments in 2007-08 was £1 billion compared to £2.2 billion in 2003-04. The number of families entitled to end of year top ups has increased as anticipated last May to 1.29 million (£798 million). This is as a result of one of the components of the package of measures announced in the Pre Budget Report 2005 to reduce overpayments.
The statistics also show that in 2007-08:
- 5.98 million families benefited from tax credits
- families received more support from tax credits with the average tax credit award increasing by £200 to £3,611 per year compared with 2006-07. This does not take into account further increases in the child element of £390 and in the basic element of the working tax credit of £160 from 2007-08 to 2009-10;
- more working people on low incomes without children received tax credits, with 336,000 receiving support through the working tax credit, up by 10 per cent. on 2006-07;
- 414,000 families benefited from the childcare element of the working tax credit, an 8 per cent. increase compared with 2006-07; and
- 108,000 families benefited from extra help for workers with a disability a 9% increase compared to 2006-07.
The Tax Credit data is published under National Statistics and available from HM Revenue & Customs website at http://www.hmrc.gov.uk/stats/personal-tax-credits/menu.htm Select “main tables”.
PBR 2005 announced a package of measures which HMRC have made implemented and have led to the reduction in overpayments. These included:
- increasing the income disregard to £25,000 to ensure almost all families with increasing incomes do not have their tax credits reduced in the first year of the increase;
- reducing the period in which people have to renew their claims and so reducing the time during which people are paid an award based on last year’s information;
- introducing new reporting arrangements to increase the number of changes in circumstances that are reported to HMRC and reduce the time taken to report these changes;
- restricting the amount by which ongoing tax credit payments can be reduced to recover an in-year overpayment to ensure low to middle income families don’t face an unexpected reduction in their payments; and
- when an estimate of a reduced current year income is reported, future payments are adjusted but a one-off payment is no longer made for the earlier part of the year. Instead, when the award is finalised at the end of the year any necessary adjustment is made then, tackling the problem of families overestimating falls in their income.
Latest figures already published show that in 2006-07 take up of Child Tax Credit was at 81 per cent with 88 per cent of the money available being claimed. Take up for those on incomes of less than £10,000 is over 90 per cent and 95 per cent amongst lone parents.
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