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Tax Credits Overpayment
Change likely to cause serious hardship
TAX Credit claimants earning over
£20,000 may see sharp cuts in payments as HMRC recovers overpayments at a higher
rate, says a concerned Low Incomes Tax Reform Group.
Changes announced in the March 2014 Budget come into effect today. It will
affect Tax Credit claimants with a household income of more than £20,000 who are
paying back a historic Tax Credit overpayment from their present Tax Credit
payments.
The maximum rate at which their ongoing payments are reduced in order
to repay the debt will increase from 25% to 50%. This means they will pay back
the overpayment at a faster rate, but will see their Tax Credit payments
significantly reduced.
LITRG is calling on HMRC to devise some form of protection from the 50%rate for
those with childcare costs and those who receive the disability elements of Tax
Credits.
Anthony Thomas, Chairman of LITRG, said:- "This change is likely to catch
people out as they may not be aware that their payments are about to reduce by
an additional 25%. The cliff-edge income threshold means it is going to affect
families with household income of more than £20,000 whatever their
circumstances. This is likely to hit those with high childcare costs or who
receive extra payments due to disability even harder as their awards will be
higher.
We fully support the need for HMRC to recover overpayment debt but this should
not be at such a rate that it has the potential to plunge people into serious
financial hardship. We are extremely concerned that this
measure, especially when combined with other recent debt measures like
recovering working Tax Credit overpayments from ongoing Child Tax Credit awards
and vice versa, might well cause claimants to fall into hardship. The current
Tax Credit hardship
processes are not well publicised and little information is provided about when
someone might qualify under hardship provisions.
We urge HMRC to consider protecting those with childcare costs or who qualify
for any of the disability elements from this 50 per cent recovery rate so that
they do not face losing a significant part of their awards. Failure to do this
may force people out of work if they cannot pay their childcare costs, and may
leave people with disabilities unable to meet the extra costs associated with
their disability."
Do you think this will affect you? Are
you worried about this change? please email us your thoughts and concerns
about these changes to our newsroom via:-
News24@SouthportReporter.com.
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