Nottingham & District Citizens Advice Bureau
the charity for your community
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Nottingham & District Citizens Advice Bureau the charity for your community |
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Half of tax credit claimants “less likely to claim in future” – Citizens Advice survey Problems with the tax credits system are causing a crisis of confidence among those who rely on them most, with almost half the respondents in a new Citizens Advice survey saying they would be less likely to claim them in future as a result of their experiences. Problems with overpayments were the most significant factor influencing their decision. In the national charity’s online survey findings published today, 86% said tax credits were an important or very important part of their income, essential to meet mortgage and childcare costs. But one in four said their experiences made them less likely to claim again in future, and a quarter said they would definitely not want to claim again. Of those who said they would continue to claim, many comments suggested they would do so reluctantly, feeling they had no choice, despite the stress and uncertainty they had experienced, as they needed the money to survive. Eight in ten respondents had been overpaid, and seven in ten reported that the recovery of overpayments - when tax credits were suddenly cut or stopped without warning or explanation - caused their family financial difficulties. Some reported having to go without basic items such as clothing and baby milk, taking out loans to pay the rent, getting into debt, and having to rely on other family members to step in to pay for food. A significant number of respondents highlighted the devastating impact tax credit problems had had on their family lives. Some referred to having to sell or re-mortgage their homes; to their families breaking up under the strain, and to severe stress and illness. A third had been overpaid between £500 and £1499, but over a quarter had been told they owed more than £2,500 and for one in ten it was more than £5,000. Eight in ten of those overpaid said they did not find it easy to understand why they had been overpaid, and that explanations were difficult to get. Although 65% challenged the overpayment, the vast majority of these (83%) found this difficult. Many respondents expressed concerns that the unpredictable nature of tax credit payments made it very difficult to budget, while those who had been overpaid reported that having their payments cut without warning caused them tremendous difficulties. More than 1,500 respondents completed the online survey, which ran on the charity’s www.adviceguide.org.uk (external link) website during April and May 2007. In the last financial year (2006/2007) Citizens Advice Bureaux dealt with 186,000 problems tax credit problems – up 21% from the previous year. Under the tax credit system introduced in 2003, around £17 billion is paid in tax credits to around six million families every year. For those on the lowest incomes, a tax credit award can represent a substantial part of their income; for example, a lone parent with two children working 20 hours a week at £6 an hour and with £75 a week childcare costs would be entitled to around £200 in working and child tax credits. A family with 2 children earning £25,000 or more would get £545 a year or £10 a week. Official HMRC figures show that around a third of all tax credit awards have been overpaid each year for the first three years of the system. David Harker, Chief Executive of Citizens Advice said; “The number of people who have been put off future claims is very worrying. People have lost faith in the system and are concerned that they will find themselves with another large lump sum to pay off and so are choosing to opt out of the system, even though tax credits are a really important part of their family income. “Two years on from our earlier report improvements have been made, but our evidence suggests the Government needs to do considerably more to restore public trust in the tax credit system. Agencies and charities like Citizens Advice actively encourage people to claim what they are entitled to, but claimants need more reassurance that real efforts are being made to provide clearer information, and make it easier to sort out problems quickly. As some of the responses in our survey show, tax credits can play an essential part in family finances, but they can only work if they provide a reliable source of income. Our survey shows that for too many people the uncertainty, anxiety and hardship claiming tax credits can cause outweighs the benefits of the extra money they should provide.” Citizens Advice is pressing HMRC to improve the quality of information and advice available to claimants on award notices, over the helpline, and face-to-face. It is also calling on the government to introduce an independent right of appeal on overpayment recovery on grounds of official error, to introduce further limits to overpayment recovery to prevent excessive loss of income, and to consider introducing fixed awards to provide a stable income that helps families budget without fear of sudden drastic changes to their tax credit payments. Main findings
Comments from tax credit claimants as part of the survey:“The idea is a good one and the money can be life changing to a family but it’s devastating for a family when they get it wrong as we found out. We went from being not well of and getting by but happy with our family to my husband working all the hours extra he could, and myself working extra nights and sleeping whenever I could, our kids were missing us and us each other till it hit us both and we have both at different points been signed off work with stress. All I would ask is please get it right we are not just a number we all have lives that are affected.” “It is a system which is impossible for the claimant to understand. What is on the award notices is not always what is on their system and when you make phone calls you cannot understand what you are being told. I don’t get the impression that the operators understand too much themselves. It has caused me myself to be near a nervous breakdown, and the stress has caused nothing but money worries and family stress. We just don’t know how to deal with the situation which seems to get worse and worse.” “Tax credits are a necessary evil. I’m always worried they will change their mind about them, but can’t live without them. It’s just catch-22.” “I pray for the day I can afford not to claim child tax credit, it causes huge amounts of stress.” “The experience was extremely stressful and difficult to resolve. I am currently paying back the overpayment at considerable hardship to myself. I will not claim in the future as I would not risk another overpayment.” “I just wish that I had never claimed these tax credits and wish that I could turn the clock back. I hate living with the threat of having to pay back £6,500 that I was assured belonged to my family and was paid to us by the Revenue at a time when we needed it the most…Although this ‘overpayment is being clawed back on a monthly basis, this means that we will not receive tax credits until our daughter is 9 years old (a Revenue telephone advisor chuckled when they told us this!) The whole system is a shambles and the government should hang their heads in shame at what they have done to some of the neediest families in Britain.” “Gave all relevant details. Then found out several months down the line that I’d been overpaid. Tax credits stopped and left me in dire straits. Myself and son had to live off a weekly shop of £5-10 a week, for months. I honestly considered suicide at this time. I had no family to turn to for help.” “It has driven us to the point of bankruptcy, ruin, depression, break-up. The worst.” “When you are on a limited income the most important thing is to know how much you have coming in and when so that you can budget – I have been unable to do this since this system started, leading to stress, worry and bank charges.” “My tax credits were a pivotal part of my household income and loans and credit cards were taken out knowing that we could pay them back from the tax credit money, a year later I’m told I have been over paid and had £140 per month reduced, thus causing me to default on all loans and credit cards. Now I have threatening letters from debt collectors on an almost daily basis.” “Sometimes I struggle to get by a full month. When I advised tax credits of this I was told ‘yes but your tax credits are only reduced by £5.75 per week,’ this made me quite angry. That £5.75 could be an extra power card as its expensive to heat our home or it could pay for my son’s school dinners for a whole week, to them its nothing to me it could be paying for something.” “We have actually had to go without basic items such as clothing and baby milk and at one point the phone was nearly cut off.” “We had barely enough to live on, we could not afford even gas to keep us warm and we since then have had to go bankrupt as we had no money to live on ‘cause they just stopped our payments!” “We have never been sure of what we are entitled to, or how our entitlement is worked out. My heart sinks every time a tax credit letter drops through the letter box, in case it is bad news! We find claiming a very stressful experience and never feel secure with our award. We would not claim if we did not need the money so badly!” “This has caused so much hardship stress and upset, I would advise to keep well away from tax credits.” Tax credit survey briefing |
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