Farley And Partners

WELFARE

TAX CREDIT DEBT RECOVERY

The recovery of tax credits is to be more intensive. HMRC will recover overpayments of working tax credit (WTC) from payments of child tax credit (CTC), and recover overpayments of CTC from payments of WTC.

HMRC will extend the use of the private sector to improve the collection of tax credit debt where this is in excess of £3,000 and has already passed through the extending tax credits debt collection process.

INCREASE IN THE TAX CREDITST APER RATE

From April 2016 the taper rate in tax credits will increase from 41% to 48% of gross income. Once claimants earn above the income threshold in tax credits, it will be withdrawn at a rate of 48p for every extra pound earned.

UNIVERSAL CREDIT WORK ALLOWANCES

From April 2016 the income thresholds in tax credits will reduce from £6,420 to £3,850 per year. Work allowances in universal credit (UC) will be abolished for non-disabled childless claimants, and reduced to £192 per month for those with housing costs and £397 per month for those without housing costs. Claimants earning below these amounts will retain their maximum award.

LIMIT CHILD ELEMENT IN TAX CREDITS AND UC

The child element of tax credits and UC will no longer be awarded for third and subsequent children born after 6 April 2017. Multiple births and other exceptional circumstances will be protected from the 2 children limit.

INCOME RISE DISREGARD IN TAX CREDITS

From April 2016 the amount by which a claimant’s income can increase in-year compared to the previous year’s income before it is adjusted is to be reduced from £5,000 to £2,500

BENEFITS UPRATING

Most working-age beneits, for example Jobseeker’s Allowance and Income Support, will be frozen for 4 years from April 2016. This freeze also applies to CTC and WTC (excluding disability elements).

HOUSEHOLD BENEFIT CAP

The household beneit cap will be reduced to £20,000, except in Greater London where the cap will be £23,000.

HOUSEHOLD BENEFIT CAP

  • Rest of UK £20k
  • Greater London £23k
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