CIOT: Justice at last for tax credits claimants who start or end relationships
The Low Incomes Tax Reform Group (LITRG) has applauded the announcement in the Pre-Budget Report that, where people who receive tax credits start to live together, or separate, but are late reporting the change to HMRC, the resulting tax credit overpayment will be reduced by the amount that the claimant would have been entitled to receive had they reported the change promptly.
This is something which LITRG and other campaigners in the welfare rights world have been urging the Government to do for a number of years.
Under the tax credit rules, if couples separate, or one member of a couple dies, or two single people get together to form a couple, this must be reported to HMRC within one month. The reason is that tax credits payable to a person in one capacity (e.g. a member of a couple) cease as soon as they can no longer claim in that capacity. They may then be able to claim in their new capacity (e.g. as a single person), but they must make a separate claim for that.
John Andrews, Chairman of LITRG, commented:
“The old rules on reporting a change of household created overpayments that were quite disproportionate, given that the ‘offence’ was often no more than a failure to get paperwork in order at the proper time, or to tell HMRC of the change during a stressful time. Indeed, many claimants find the rules so complex that it is often difficult to know if a reportable change has occurred.
“Today’s announcement is most welcome and reflects what the claimant population, and their advisers, would regard as only fair and reasonable.”
Notes to editors
The Low Incomes Tax Reform Group (LITRG) is an initiative of the Chartered Institute of Taxation (CIOT) to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.
The CIOT is a charity and the leading professional body in the United Kingdom concerned solely with taxation. The CIOT’s primary purpose is to promote education and study of the administration and practice of taxation. One of the key aims is to achieve a better, more efficient, tax system for all affected by it – taxpayers, advisers and the authorities.
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George Crozier
External Relations Manager
D: +44 (0)20 7340 0569
M: +44 (0)7740 477374
The Chartered Institute of Taxation www.tax.org.uk
The Association of Taxation Technicians www.att.org.uk
Low Incomes Tax Reform Group www.litrg.org.uk
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