The deadline for the renewal of tax credits is up today. Families who wish to take advantage of financial assistance by the state must return forms before the end of the day or their payments could stop.
Tax credits are available to four specific groups including people with disabilities, children, families and babies. Families who have a household income of less than £58,000 are eligible for the benefit. About 4.7 million British households are in receipt of tax credits at the moment.
Child tax credits are paid to single people or partners whose income is less than £58,000 a year and have children. Families with a higher maximum income of £66,000 and at least one child under the age of one can also qualify . The exact payment allotted depends on the number of children they have, their ages and any disabilities they suffer from.
Working tax credit is paid to people on low incomes totalling £16,000 or less. Currently, the way the system works means that high earners receive less than low earners. However, Chancellor George Osborne’s announcement that the tax credit system will undergo cuts and changes in his budget speech, will affect middle earners the most.
People in the middle income bracket, earning between £16,190 to £40,000, will see their benefits reduced, where as those earning under £16,190 will receive the same level of payment as before.
Yesterday, Work and Pension Secretary Iain Duncan Smith called for a complete revamp of the welfare system. His plans outline the replacement of five benefits including working tax credit, child tax credit, income support, council tax benefit and housing benefit into a single benefit at a uniform rate.
The reform would cost £3 billion to implement. Duncan Smith said: “When we look at figures for investment, we have to recognise that right now the present system costs significant amounts of money more each year – £60 billion in the last 10 years. And because of its complexity, when you look at the way tax credits have to be administered, we know there are dramatic amounts of money that are overpaid each year and lost”.