The credits are due to be introduced in 2003. The integrated child credit will bring together existing support for children, but the employment tax credit will offer entirely new support to low-paid workers without children.
The new credits have so far been excluded from the Treasury’s public finance projections. And the IFS says the cost could rise to Pounds 2.8bn a year – about the yield of an extra penny on the basic rate of income tax – to ensure that no dual-earner families who currently receive the children’s tax credit lose out.
Around 5.7m families with children could receive the integrated child credit. And in order to preserve the safety net and concentrate money on the poorest families, the government will ask claimants to report some changes in circumstances to the Inland Revenue.
The IFS warns that this could make the system more complex and less certain for many families. Mike Brewer, one of the authors of the report, said: ‘Whether the reforms achieve simplification depends on how many claimants will have to deal with the Inland Revenue within the tax year, as well as at the start and end. As yet, the government has provided no indication of how many people will be in this position’.
Around 400,000 families will be entitled to receive an average payment of around £16 a week under the employment tax credit for workers without children, the IFS says.
Making Tax Digital will impose significant additional tax compliance costs on small businesses for little or no medium term benefit, tax and small business experts told MPs
The drive towards a fully digital tax regime is an admirable one, but mandation is simply wrong, according to one of the UK's most senior tax technology practitioners - Paul Aplin
HMRC has won its tenth successive case against tax avoidance schemes promoted by NT Advisors. The Court of Appeal has ruled that NT ... read more
HMRC is continuing to ramp up the number of raids on premises it carries out as part of criminal investigations, searching 761 properties in the last year