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Treasury

Answer

Mr. Webb: To ask the Chancellor of the Exchequer (1) how many child tax credit claimants he has written to with details about the process of finalising their 2003-04 claim and renewing a claim for 2004-05 reassessments; and how many have responded; [184687] (2) what the (a) total and (b) average value is of tax credits (i) overpayments and (ii) underpayments that (A) have been repaid and (B) are outstanding; [185062] (3) how many tax credits awards for 2003-04 have been finalised; of these, how many families have had their subsequent rewards (a) reduced and (b) increased because of overpayments or underpayments; and what the value was of (i) overpayments and (ii) underpayments of (A) child tax credit and (B) working tax credit. [185063] Mr. Laws: To ask the Chancellor of the Exchequer how many tax credit renewal forms were received back for the 2004-05 year by 30 September; and if he will make a statement. [191780] Dawn Primarolo: Tax credit awards are initially set using latest circumstances and previous year income. Families are encouraged to report changes in both income and circumstances in year; any changes not notified in year will be picked up at the end of the year when tax credit awards are finalised. In this way the tax credits strike a balance between a system that provides certainty of support, and a system that responds to changes in family need. Furthermore, the first £2,500 of any income rise is ignored. As I announced on 19 November 2003, Official Report, columns 1099-1100W, in a written answer to the hon. Member for Birmingham Northfield (Richard Burden) from April, Inland Revenue wrote to all families who had had a 2003-04 tax credit award to explain the action they needed to take to finalise their 2003-04 award and to renew their award for 2004-05. Families were sent reminder letters and as the 30 September deadline approached, those that had not returned their annual declaration were telephoned as a further reminder. Many families contacted the helpline, both for help and to provide the information necessary to finalise and renew their awards. All of this activity was supported by an extensive publicity campaign involving television, radio and newspaper advertisements which began in April and ran across the summer. Families benefiting from the Child Tax Credit through IS/JSA continue to receive their support in this way and are not part of the renewals process. And families receiving the family element only were told that they needed to contact the Inland Revenue only if their income had changed significantly or their circumstances had changed. This has meant that 1.3 million families did not need to contact the Inland Revenue and these families will have their awards renewed automatically. A further 3.7 million have returned their annual declaration enabling their 2003-04 award to be finalised and their initial award for 2004-05 to be set. At the start of October, around 200,000 families had neither renewed their award nor contacted the Inland Revenue and stood to have their awards cut off. For 2003-04 tax credit awards were set using 2001-02 income. As set out in "The Child and Working Tax Credits. The Modernisation of Britain's Tax and Benefit System Number Ten April 2002", the first £2,500 rise in income will be disregarded for tax credits. This disregard means that many families will not see their tax credits reduced as their incomes rise. The Code of Practice 26 sets out what happens when tax credits have been over or under paid. Analysis of the numbers of families with over or underpayments and the values of these will only be available once all awards have been finalised. This will only be after the deadline of 31 January for reporting of final 2003-04 income for those families only able to provide an estimate by the 30 September deadline. Statistics on over and underpayments will be published in Spring 2005 under National Statistics.

Secondary information

Type

Written question

Reference

426 c947-8W;426 c951-2W; 191780

Session

2003-04

Subjects

Forms Welfare tax credits

Contains statistics

Yes

Link

View this Written question on www.publications.parliament.uk