Sunday, April 1, 2012

HMRC ‘misleading’ on child tax credits says charity

Tax credit leaflet

HMRC letters advising parents about tax credit changes are misleading says a leading tax reform charity.

The letter which has been sent to 1.3m homes says the income limit to get child tax credit is £26,000.

Low Incomes Tax Reform Group says that figure is for one-child families only and larger families earning over £50,000 may still be eligible.

HMRC says the letter is "not incorrect" but "not worded as well as it could be".

Victoria Todd of the Low Incomes Tax Reform Group (LITRG) told Radio 4's Money Box programme that the letter was misleading and could prevent some parents claiming tax credits if their circumstances changed:

"If parents with one child and an income of £30,000 receive that letter and their tax credit stops in April, they may not realise that if they have another child they will then become entitled."

The income limit to qualify for child tax credit is being cut and could result in more than a million households losing their child tax credit entitlement.

The new limit is around £26,000 for a one child family but it is higher where there are more children - £32,200 for a two child family, £38,800 for three and £51,900 if there are five children or more in the family.

If a parent also pays for childcare, or is disabled, the limits can be higher still.

HMRC said it apologises if any confusion has been caused.

The LITRG also criticises a separate HMRC letter concerning working tax credits which was sent to nearly 300,000 couples, who could lose nearly £4,000 a year due to new rules.

If you a have tax credit query you can contact the HMRC's tax credit advice line on 0345 300 3900.

From April this year, a couple must work a combined total of 24 hours to qualify for the credit - previously the limit was 16 hours a week.

However, there are exceptions which allow some couples to work no more than 16 hours between them and still keep the full working tax credit.

Some exceptions are mentioned in the recent letter but a new exemption was agreed after the letters were sent out - this allows a couple where one is a full-time carer to work for only 16 hours a week and still receive working tax credit.

Gina is a full-time carer for her 8-year-old disabled son. Her husband Tom was made redundant and he now only works part-time for 16 hours a week in a retail job:

Hear the full report on Money Box on Radio 4 on Saturday, 31 March at 12:00 BST or listen again via the Money Box podcast.

"The lady I spoke to [at the HMRC] had no idea as far as she was concerned we were going to lose our money from 6 April. Then she checked and said she had just been notified we would keep it."

"She said it was a good job I rang as if I hadn't they would have taken the working tax credit away from me on 6 April."

Victoria Todd of the Low Incomes Tax Reform Group says HMRC has not handled the change well:

"Guidance for the tax credit helpline has only just gone live but people must contact HMRC by 6th April or their credit will stop. They could lose as much as £3,780 a year."

HMRC told Money Box: "HMRC will soon contact directly those carers who have potentially been affected."

"It will be important that, wherever possible, customers make HMRC aware that they fall into one of the exemptions, and we are working with carers' groups to highlight this fact."

People who are uncertain about their tax credit status should contact HMRC urgently via the tax credit telephone advice line on 0345 300 3900 or find out more via the HMRC website.

You can listen again via the Radio 4 website or by downloading Money Box podcast.



Will you be affected by the changes? Let us know your views



Source & Image : BBC

No comments:

Post a Comment