Tax credit problems could outweigh benefits, study finds

    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:


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