Improvement to Tax Credits administration vital to meeting child poverty targets

22.05.07

Official data published today shows 72,000 tax credit awards to Scottish families were underpaid by £39 million in 2005/06, with 30% overpaid a total of £133m. Across the UK 5.9 million families (10.1 million children) benefited from Working Tax Credit and Child Tax Credit.

Commenting on the figures John Dickie, head of the Child Poverty Action Group (CPAG) in Scotland, said:

“It is vital that families are paid the right amount at the right time. The uncertainty, underpayments and overpayment recoveries have left many families in Scotland struggling with a reduced income.

“Tax credits are an essential part of the UK Government’s strategy to end child poverty and have undoubtedly helped keep many families out of poverty. The Government must get the system working properly and restore public confidence in it to meet the target of halving child poverty by 2010.

“Changes introduced by the Treasury last year should reduce the number of overpayments but are too recent to impact on today’s figures. But they still need to do more, such as putting in place an automatic pause before overpayments are recovered to allow people time to dispute them if they are the fault of poor administration, not of the claimant.”

Notes to Editors

• CPAG is a member of the Campaign to End Child Poverty
• In 2005/06 5.9 million families (10.1 million children) across the UK benefited from working Tax Credit and Chid Tax Credit – a slight increase on the previous year.
• Both the amount and the numbers of families affected by underpayments and overpayments went down between 2004/05 and 2005/06
• The majority of awards did not have either an underpayment or an overpayment (around 60% of awards)

UK Averages (estimated from figures): (see http://www.hmrc.gov.uk/stats/personal-tax-credits/cwtc-annual-0506.pdf )

• The tax credit system paid out £17,060 million in 6.5 million awards in 2005/06, averaging at £2,631 per award.
• It underpaid 886,000 awards (just over one in 10), at an average of £620 per award
• It overpaid 1,902,000 awards (just under three in ten) at an average of £827 per award.

In Scotland (see http://www.hmrc.gov.uk/stats/personal-tax-credits/cwtc-geog-payments-0506.pdf)

• 571,000 awards in total in Scotland
• 72,000 were underpaid (approx 13% or 1 in 8). Total amount underpaid is £39m
• 30% overpaid. Total amount overpaid is £133m.

For further information please contact:

John Dickie, Head of CPAG in Scotland on 0141 552 3656 or 07795 340 618