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AIBU?

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Original poster

To think that tax credits need reforming

26 replies

ReallyTired · 30/07/2008 00:21

Loads of families get into a mess because of over payments of tax credits. The sheer level of bureauacy is ricidolous. Does every family in the country really need to be means tested? Its a nightmare for us as my husband has to do self assessment to work out what his taxable income is.

I would like to see a simplified system. I see no reason for a middle income family to have to go through means testing. It would probably be cheaper to let the millionaires have a slightly larger tax allowance than to pay for a huge number of bureaucrats to administer the present system.

I would like to see more generous means tested tax credits for low income families. (Ie. a family with an income of less than 20K)

OP posts:
Quattrocento · 30/07/2008 00:25

I'm not sure what you are suggesting. Is it

  1. Simplification (how)
  2. Replacement by a larger tax allowance (if so it would go to people without children as well and the whole point was to eradicate child poverty)
  3. More generous tax credits for lower income families (ie more of the same)

Personally I think the whole thing should be scrapped and child benefit massively increased

Original poster
ReallyTired · 30/07/2008 08:56

"1. Simplification (how)"

I'm not sure, but the system is hideous at the moment for those who are self employed. Its a lot of sweat for very little money. I disagree with joint taxation.

"2. Replacement by a larger tax allowance (if so it would go to people without children as well and the whole point was to eradicate child poverty)"

You could just give a slightly larger tax allowance to people with families. The tax system is used to people with different tax allowances.

A family earning just under 50K does not have a problem with child povety. I think that there needs to be a lower cut off point than at the moment.

  1. More generous tax credits for lower income families (ie more of the same)

The point of tax credits is to reward low income families for working. In many ways I think thats a good idea. It was also to replace the married tax allowance.

The problem with massively increasing child benefit is that the non working poor would get it as well as the working poor.

OP posts:
chelsygirl · 30/07/2008 08:56

couldn't agree more

we are on less than 20K

mumfor1standmaybe2ndtime · 30/07/2008 09:03

I agree.
Just tax the highest bread winner less tax would be a start! Cut out the middle man. Or bring back the married tax band. Old fashioned values I know - but it worked.

Not sure how you would make it more simple for people who don't work.

KatyMac · 30/07/2008 09:04

My husband & I are about £200 over the limit to get help (not WTC - but council tax benefit)

This would give us an extra £800 a year but despite the amount we don't get help

So someone on £200 less than us a year would benefit by £800 why can't we benefit by £600

(don't think that makes much sense but it made sense to me)

chelsygirl · 30/07/2008 09:06

KM, I've been there its not fair

we're the working poor

mumfor1standmaybe2ndtime · 30/07/2008 09:07

KatyMac, I know where you are coming from. We are over the limits too. It is daft.

DanJARMouse · 30/07/2008 09:09

I agree with scrapping tax credits and massively upping child benefit.

onlyjoking9329 · 30/07/2008 09:27

tax credits is our main income, the kids get Dla and I get a small pension and incapacity benefit.
Tax credit stopped paying us 7 weeks ago cos my Dh died, they have to reassess I have done all the paperwork but child benefit has still not been changed over from DHto me I have been waiting about a month for CB to be sorted out, Tax credit won't pY me until they have the CB number, widowed parents allowance also won't pay me without the child benefit number.
Upping the tax allowances won't help our family cos with 3 kids with autism and a dodgy back I ain't able to do paid work.

mustsleep · 30/07/2008 09:44

please don;t start me on wftc

my husband is self employed so no set wage and as they take your earnings from the previous year

anyway he earned an extra £1k one year and we ended up owing them £2k and after 5 years we are still paying it back

we earn £25 between us and get £10 a week for two kids and i will not work anywhere where i will need chldcare anymore as they reduced our weekly childcare payments from £100 a week to £30 a week rendering my job pointless

may be they could come up with a system where nurserys could only charge a certain amount an hour for your child or they couldn;t charge a full days pay for anything after 1pm

makes me omg and i have to phone up later to renew it!!

Original poster
ReallyTired · 30/07/2008 09:55

mustsleep, It took us SIX attempts to get through on the phone. Its madness.

Paying an accountant to work out what you are due for tax credits, wipes out any benefit. I think the biggest problem with tax credits is that people's circumstances constantly change and it causes nothing but headaches.

I'm sorry to hear about the death of your husband onlyjoking. I hope they sort out your financial situation soon.

OP posts:
mustsleep · 30/07/2008 10:03

reallytired dh hasn;t even been to the accountants to do his return yet so i am going to have tell them his income is the same as last year and then call them up when we have worked it out after the accountants less expenses

plus i will have to call back in a couple of weeks to tell them that i am on maternity allowance when ever that gets sorted out (ou'd think that seeing as how most of these "benefits" come from the same place they would communicate with each other it;s like the inland revenue issue your p60 and deal with the tax returns sp they klnow how much you have been paid so couldthey not just work from that?

this i also find strange if i was receiving smp i would have to declare it and it would be added into our family income, but as i will be claiming maternity allowance this is not counted odd

LazyLinePainterJane · 30/07/2008 10:05

Well, don't worry, am sure they will be reformed when the tories get in.

Pixel · 30/07/2008 10:47

We just renewed out tax credits and I declared the £1700 that I earned by working from home in the last year. Have now got a letter saying they want £800 back from CTC and dh has been told he won't be getting any WTC (he is only on a low wage anyway). Makes all that sitting up until 2am really worthwhile doesn't it? I'm going to have to seriously consider whether I can afford to take on any work this year , especially as our rent has just gone up again.
Why can't they just tax dh less to start with, instead of all this mucking about? I'm convinced there is no-one in the country who actually understands the system and there are offices full of people making it up as they go along.

Original poster
ReallyTired · 30/07/2008 11:26

It does seem daft that with all our fancy computers that tax credits cannot be calculated on the fly through PAYE.

Actually thinking about it, increasing child benefit would be dead simple and fair. I still think that we should keep WTC for low income families to make them better off than being on benefits.

I am not sure how childcare tax credits could be simplifed. That would need thinking about.

OP posts:
bluefox · 30/07/2008 11:33

Pixel we are in a similar situation. Have spent the last year working an extra (minimum wage) job (unsocial hours) to make ends meet. Now been told tax credits will stop completely and have also lost entitlement to free prescriptions/dental charges/opticians etc. It just dosent seem worth all the hassle.

EsmeWeatherwax · 30/07/2008 11:33

The whole system is a mess. My dh was unemployed last year, so we got the full amount. He started work on a self employed basis a couple of months ago. I phoned them immediately to tell them, and our tcs did go down, but not by the huge amount we were expecting, I have phoned to check the figures are right repeatedly. I am fully expecting to have to pay back upwards of two grand next year, and will not be pleased if this is in fact the case, given how hard I have tried to sort it.

Heaven knows what could be done to sort out its numerous failings mind you.

mustsleep · 30/07/2008 12:38

maybe they should just do it how it was before hand where you are stuck with whatever for 6 months and cannot change it at least it reduce the risk of you having to pay them back

but i suppose that some abused this and would get a job at the start of each six month period and then quit

rebelmum1 · 30/07/2008 12:42

Yeah how about they don't take the bloody tax off you in the first place. Rather than take it, employ bureaucrats, pay for the technology and systems to establish whether you should have some of it back. Beggers belief if you ask me and a complete waste of tax money!

IorekByrnison · 31/07/2008 16:58

Have been thinking the same thing. In principle I think it is a great thing, but I don't understand why it can't be done through PAYE/self-assessment forms, ie not take the tax in the first place from parents on low incomes, rather than taking it and then giving it back (and in the many cases of overpayment taking it away again!) in this bizarrely convoluted, inefficient and expensive system.

Can someone who is clever at this sort of thing explain?

expatinscotland · 31/07/2008 17:00

YANBU.

Especially now that the 10p band has been abolished.

The threshold for a family to be eligible for WTC is way too low.

expatinscotland · 31/07/2008 17:06

and i don't blame people at all for staying on the dole when the alternative is tax credits.

i really and truly don't.

especially after having lived through one of their cockups that left us living well below the poverty line.

i think tax credits persecute the working poor and force them to be beholden to the state.

we don't want handouts! we want to keep more of what we earn!

Cammelia · 31/07/2008 17:28

Presumably they make people claim tax credits rather than take less income tax because some poeple won't claim/ know how to claim/ be able to claim/ etc

So the govt keeps more of the taxpayers' money

catweazle · 31/07/2008 18:51

I don't think you could simplify the current system to everyone's satisfaction.

Under the old system of Family Credit the level was always set just under my DH's wages (then a supermarket worker so on low wages) so despite having 4 children we were entitled to nothing.

That system was open to widescale abuse with people conveniently lowering their wages for a few weeks before each renewal. We also had a colleague who "separated" from her DH every 6 months, only to miraculously reunite once her claim had been settled

We were overpaid last year. I was on maternity leave so much reduced for the year. DH gets paid weekly so it's hard to know what he'll get as he gets paid different amounts each week. I waited as long as I could, worked it all out and told them the new figures. Then DH gets a £700 bonus We were overpaid by £500

Any other system would need joint/ family taxation.

MrsFluffleHasAWuffle · 31/07/2008 18:58

I think reverting to the old Family Credit system would be a better step to take - not haivng to constantly update circs, this is where it all goes tits up ime as for some reason lots of things just do not seem to get logged, then it's denied you ever told them!!