The Great Tax Credit Rip-Off

I found myself a bit light also in April. I had completed many forms and eventually decided to do so online. Once this happened I was immediately sent several cheques totally to nearly 1500. I should have been receiving the basic 500(ish) per year but they has calculated that even though I was working full time that my annual income was 0 !!! The first few cheques I spent believing them to be tax rebates (no covering letter) and they continued to pay me in my salary which has meant that I have had to managed finances carefully so that I may repay this debt.

I have phoned and payments have stopped - It took three weeks of me ringing

I am now worried about how they will handle the debt I have now incurred. No further money's were spent and I have a pile of uncased cheques at home.

I was advised that "it would all be sorted" next April - which means that I can look forward to another catalogue of errors...

It's the work of Dawn Primarolo (Treasury Minister and chief imbecile).

Basically the bureaucracy weren't happy that they had enough power to interfere in the day to day lives of normal people. Before Tax Credits they only had social services, child support, social services and obviously many escaped having anything to do with these agencies, so now many more can enjoy the experience.

Not to mention the hours filling in the stupid form in the first place, I wonder how they factor into costs the amount of time normal people have to spend figuring it all out (the pages of form filling, the huge help manual), my bet is they ignore it totally when calculating the efficiency of the new system. Obviously a trick she learnt from the master of pointless complication himself, Gordon Brown.

We all have different political views but why would anyone support these bureaucratic expansionists pissing our time and money away?

"abracad" wrote

A civil servant trying to avoid work, a citizen not realising it costs nothing to say, yes she is looking for work.

"Zoe Brown" wrote

Nothing you do, can cause more confusion than uncashed cheques.

Put them in a seperate account until such time you are satisifed the money is yours.

The fact you're now getting less (the correct amount) is irrelvant I suppose? I don't want to support your kids, so kindly refrain from having any more unless you can pay for them yourself.

I could do this but they had allready expired (they are only good for four weeks)

Tax credits replace the old system where parents were given a higher tax allowance. Many people have been affected by this system (like me) who have been supporting their kids and earning good money. This is only worth about

In article , Frank X writes

Like you say, I am sure they dont. In fact, they probably expect a large number not to bother due to the complications.

This government stinks. but so did the last one ultimately, and the one before that.

You don't know how much he earns, so you don't know if he is a net tax-money recipient or producer. Even if he is a net recipient, his kids will be paying taxes for your state pension and old-age care (and for that of several like you, the public sector workers of whom will more than likely be on very-costly final salary schemes), which due to the demographics involved is likely to cost them more than they cost you.

On the other hand, all this mess could be avoided if everybody's taxes were radically reduced and parents paid for their own children's schooling, and everybody was expected to take responsibility for saving for their own retirement.

Yep governments do tend to stink, as all large political organisations tend to. Power corrupts etc.

The benefit of a least one previous government was that it recognised the difficulty of government and promoted a society with less government interference.

How can a calculation using an income two years out of date be well thought out?

The ideal would be for an integrated tax and tax credit system worked out properly in the same manner as PAYE.

Lets look at the present system of credit and say housing benefits: The effective rates of tax / loss of credit are quite amazing. If you're a standard tax payer, then you loose 23% in income tax, 9% in NI and 37% in reduction of tax credit. I make that an effective tax rate of 70%. Call that well thought out? Sorry if the rates are a bit inaccurate but they give you the picture. Add to that say reduction of housing benefit of 65%, reduction of council tax benefit of 20%, leads to an overall rate of taxation of 95%. Are you the sort of person that thinks a higher tax rate of 40% + 1% NI is too high. Just think of the lower-middle wage earner who for every pound he earns can get just 5p in his pocket.

Well thought out???????????

In theory you can let them know if your circumstances have changed and they'll adjust your claim. You just have to spend a couple of weeks on the phone trying to get through to them. Then another couple of weeks when they've screwed up the adjustment.

No chance. Income tax is assessed independently, tax credits & benefits are assessed jointly. This anomoly makes it *much* cheaper for the government. Tax rates would probably have to rise if they started doing what most decent countries do - ie assess couples for tax jointly.

The total's right - basic rate tax is 22% and NI is 11% plus 37% tax credit reduction is 70%.

To be pedantic, only 4.5p out of every pound.

This, of course, is why the government introduced and keeps increasing the minimum wage. They know that increasing the pay of the low paid benefits Gordon Brown's coffers far more than it benefits the low paid themselves.

uk.gov.social-security

There's no reason why tax credits can't be based on current income instead if the income a couple of years ago was vey different. Although the initial award is made on prior earnings, all the claimant needs do is write back to the IR when they get their award letter and inform the IR of expected earnings for this year, asking for a recalculation based on those figures. The IR will then calculate the tax credits based on that estimate. Not a problem except that it adds a week or two before payments start coming.

Why it was set up that way, I don't know, but it is simple to have the claim calculated on realistic current figures instead of outdated ones.

I'd guess two years ago was chosen because virtually everyone, whether employed or self-employed, will have (or be easily able to get) actual income figures from various sources by now for that tax year. And also that most people's earnings won't have changed drastically over that time given the small average size of annual raises over the past few years.

In any case, for anyone whose income has shot up over the past two years, the system menas they may qualify on the old figures (and hece get tax credits now) but not on the current figures (which would disqualify them or drastically reduce the amount claimable)! :-)

Whatever system is used, someone's going to find they don't quite fit. being able to get a recalculation on current figures means someone who needs the credits now can get them now. But people whop wouldn't qualify on current figures may well be able to get credits based on old figures. Win win for the individual taxpayer.

uk.gov.social-security

no because at the end of this tax year - monies paid will be "checked" against actual earnings and any over payments collected back from the individual next year.

"Andy Pandy" wrote in message news:bk993l$6at$ snipped-for-privacy@newsg4.svr.pol.co.uk...

Yes I was 10% out :-( As you might have gathered I was just trying to make the point.

There is no reason why couples could not be assessed as such for PAYE and tax credit purposes. Couples living together (married and unmarried) are already treated differently from single people and I can give examples such as IR35 and connected companies for corporation tax purposes. I am sure there are more.

I can imagine the IR sometime next year having substantial problems in getting tax credit overpayment back from individuals. There are going to be horrendous problems. Since it also effects other benefits such as HB which the claimant could have got at the time if paid the correct tax credits, then only to overpaid, reclaimed yet not able to backdate HB etc. In fact we can't imagine the upheaval this will cause. Its a minefield. It will always happen where we don't have an integrated tax/tax-credit/benefits system. Sheer pandemonium. I shall look forward to it.

Why do you want chaos?

In view of this I think perhaps I was foolish not to cash in the cheques that I was sent earlier on in the year. As far as I understand they expire after four weeks. They are worth about 700 I think and I would like to cash them into a savings account. Is this going to be possible now that they have expired ? How likely is it that the tax office will honour them anyway ?

AIUI the preferred way will be to reduce next year's claim. I don't know what happens if the overpayment is greater than the total tax credit due the next year.

I believe HB/CTB etc will be assessed according to the tax credits *actually received* rather than the tax credits which should have been received. If you understand the system you can manipulate it to maximise benefits. For example if the tax credits you *should* be receiving make your income just too big to get any HB, then if you are overpaid tax credits you shouldn't tell them. This will result in your next year's tax credits claim being reduced, possibly resulting in you being eligible for HB that year.