Problems with the family tax credit system are threatening to
out weight the benefits it offers poorer families, a new study has
found, writes Amy Taylor.
In a review of the first year of the new tax credits, the Child
Poverty Action Group has found that ongoing problems, such as poor
understanding of the system and overpayments, could undermine gains
in child welfare.
CPAG’s chief executive Kate Green said claimants were being
paid incorrect amounts through no fault of their own and are then
having money taken off them, leaving them and their children with
little money to live on.
The report says that the complexity of the new system, which
consists of child tax credit and working tax credit and was
introduced in April 2003, hinders people’s ability to
understand what they are entitled to. Rules about which
year’s income counts, adjustments made to awards during the
year and the way overpayments are handled were all found to
contribute to this.
It recommends immediate changes to the administration of
overpayments including clearer award notices so that people know
the amount they are entitled to and what circumstances might alter
“While of course we welcomed the additional resources
provided by the new system last year and have been pleased with the
impact it has had for many low income families, the system remains
riddled with problems that are not being addressed,” said
The study also found that issues of concern included childcare,
income assessments and the relationship with other benefits.
Tax credits: One year on from: www.cpag.org.uk