More tax credits
When the tax credits system was introduced, the position was that if the claimants later had an increase in income, this would lead to some or all of the credits being clawed back. However, if the increase in income was not more than £2,500, it was ignored. This is called an income disregard.
Due to so many reasons, chief of which was incompetence, many claimants whose income increased beyond the disregard amount of £2,500, were not asked to repay the tax credits. When this was discovered, the taxman decided that he could not, in good conscience, pursue many of the claimants for back payments, as that may cause them hardship. Especially as it was the taxman's fault that the clawback did not work in the first place.
So how did they fix the problem? They increased the disregard amount tenfold. This means that a recipient of tax credits must have an increase in income of £25,000 extra before any money is clawed back. Incredible. Mighty generous, in fact.
Anyway, it was revealed today that the bill for this largesse comes in at £1bn. That's right, £1bn is the price we pay for the taxman's mistakes. Is he unrepentant? You must be joking. The Treasury is claiming that increasing the income disregard actually saved the Treasury £250m. How did they work that out? The Fisherman is puzzled.
0 TrackBacks
Listed below are links to blogs that reference this entry: More tax credits.
TrackBack URL for this entry: http://www.taxthefish.com/cgi-bin/mt/mt-tb.cgi/29
Leave a comment