Reformed tax credit system to cost HMRC £2.5bn

The decision to raise the current family income
tax credit threshold
to £25,000 (the threshold is currently at £2,500) by April next year will cost
the Exchequer a total of
£2.5bn over five years,a BBC report has claimed.

claimed this was the amount the changes will cost HM Revenue
& Customs.

This revelation follows claims by opposition politicians that the Treasury
has been hiding the real cost by using ‘smoke and mirrors’

The Treasury denied this was the case.

The BBC quoted a Treasury spokesman as saying: ‘The Treasury has provided
information on the cost of the higher income disregard to Parliament in an
entirely open and transparent manner.’

‘We have always striven to be very clear on the difference between ‘costs’ to
the Exchequer and changes in entitlement, which, although sometimes confused by
commentators, are in fact separate issues,’ the spokesperson added.

Further reading:

Overview: the ‘Taxables’ family

Millions stay at home due to tangled tax system

LibDems slam govt over tax credit payments

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