The Big Question - Tax credit gets all-clear
Only 20% of finance directors believe the Working Family Tax Credit will have an adverse affect on their organisations, writes Ben Griffiths.
This week’s Big Question survey, carried out by Accountancy Age and Reed Accountancy Personnel, found that 54% of FDs thought the WFTC would not hurt their business.
The WFTC replaces Family Credit next October and will initially be operated by the Inland Revenue. But from April 2000, employers will be required to pay low-income staff tax credits in addition to basic salary over a 26-week period. Employers can then offset it against PAYE and national insurance liabilities.
Many FDs thought the tax credit would increase administration work. David Curtis, FD of Autotype International, said: ‘This is yet another administrative burden that Blair’s government is passing on to business.’
A quarter of FDs remained neutral about the credit’s impact, but many felt it was ‘just another responsibility being put on to the employer’.
‘Any schemes to encourage people back to work should
be encouraged, although having to pay money up front on behalf of the government may upset cashflow,’ one FD said.
Of the FDs who thought the tax credit would have no adverse effect, many said their employees were paid more than the earnings threshold to qualify for the credit.