CIOT: Campaigners issue alert over tax credit changes

The Low Incomes Tax Reform Group (LITRG) is warning a number of groups of tax credit claimants that they need to contact HM Revenue and Customs (HMRC) if they want to continue receiving working tax credit after this week.

Up until this week, a couple with children have qualified for working tax credit (WTC) if one person works at least 16 hours a week. But from 6 April, couples with children will be required to work at least 24 hours a week between them, with one person working at least 16 hours a week, in order to continue to qualify for WTC. Consequently HMRC will stop working tax credit for most couples with children who do not work at least 24 hours a week between them, although their child tax credit will continue.

There are a number of exceptions to this new requirement. Anyone who qualifies for WTC in another way should continue to receive WTC by working at least 16 hours a week from April 2012. This applies to people who:

are aged 60 or over, or
qualify for the disability element of WTC.

There are four other situations where the new 24 hour rule will not apply. One person only needs to work at least 16 hours if the other person is:

incapacitated (meaning they are in receipt of certain benefits due to ill health),
an inpatient in hospital,
in prison, or
entitled to carer’s allowance.

The last exception was announced only recently after a coalition of charities, led by LITRG, wrote to the Minister asking for an extension of the exceptions to cover carers.

Couples who fit into these categories must contact HMRC themselves to make HMRC aware of this, on order to continue to get WTC.

LITRG Technical Officer Victoria Todd said:

“HMRC have a duty to help claimants understand what they have to do and when they have to do it. They have failed to do that so far with this change and as a result some of the lowest paid and most vulnerable claimants may miss out on payments.

“We have urged HMRC to write to people affected by this change to make them fully aware of all of the exceptions and the need to contact HMRC. In the meantime, if you believe that any of the exceptions to the new 24 hour rule apply to you, contact HMRC – if at all possible before the 6 April – to ensure your payments of working tax credit don’t stop.”

Notes to editors
1. 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.

2. 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. The CIOT’s 15,800 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’.

George Crozier
External Relations Manager

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The Chartered Institute of Taxation
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Low Incomes Tax Reform Group – an initiative of the Chartered Institute of Taxation

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