In the Budget the Chancellor committed HMRC to getting a further 100,000 people claiming WTC. The current rates of take up for certain classes of claimant are very low.
Now HMRC have launched part of their campaign by targeting those without children. This is the primary group where ignorance of the rules is high and the take-up low. However, the HMRC campaign threatens to exclude people who might qualify, at the same as misleading others about which year’s income is important for WTC.
How to qualify for working tax credit
You can qualify for WTC:
If you are not responsible for a child but:
- are aged at least 25 and work at least 30 hours per week; or
- are aged at least 16, work at least 16 hours per week and have a disability which puts you at a disadvantage in getting a job and receive (or have recently received) certain disability benefits; or
- are aged at least 50 and are returning to work for at least 16 hours per week after having previously been in receipt of certain welfare benefits.
If you are responsible for at least one child and:
- are aged at least 16; and
- you or your partner work at least 16 hours per week
Meeting one of those qualifying rules may then get you a payment if your income is not too high and you meet other tests
HMRC’s take-up campaign misleads
So why does HMRC’s take-up campaign mislead many people who might be entitled to WTC into thinking that they are not?
On Directgov, HMRC say:
You could be entitled to claim if you:
- are aged 25 or over
- work at least 30 hours a week
- earn up to £13,190 if you’re single, or £17,965 with a partner
If you are a parent, have a disability, or are 50 or over and returning to work, you may still qualify, even if your circumstances are different.
"I work full time and my wife has a part-time job. Together our total income, including our salaries, comes to around £13,000 so we weren’t sure if we could claim any sort of tax credit.
"But I looked into it and it was a lovely surprise to find out that e were entitled to nearly £2,000 a year Working Tax Credit. That’s not something to turn your nose up at. We phoned the helpline and it was so easy to get the ball rolling and start the claim. We are so glad of the extra support, it really helps from month to month.
"We’ve told our friends all about it and they’re claiming too now – the more the merrier, we say!"
Bill, 53, and Kathy, 51, Gateshead
These extracts fail to explain that WTC can be based either upon your income for the last tax year (to 5 April 2009) or the current tax year, whichever is the lower (unless, exceptionally your income rises by over £25,000 year on year).
So if Bill and Kathy had a joint income of £13,000 last year and a joint income of £18,000 this current tax year, they would still have been entitled to WTC. But how many Bills and Kathys would have realised that fact from reading the extract above?
Sid who is 26 and single was on Jobseekers Allowance all last tax year. Since April he has been in a job earning £15,000. He too is misled and doesn’t apply.
Why other people might be put off too
A sizeable population who fail to claim WTC are dismissed with the words:
“If you are a parent, have a disability, or are 50 or over and returning to work, you may still qualify, even if your circumstances are different.”
Now what does that mean? What encouragement is there in that statement to find out?
If you were 20 years old would you imagine that you could be entitled, because the only HMRC reference to age is to 25? As we have shown, you can be entitled at these younger ages.
If your income is £18,000 in both years might you qualify (because HMRC’s only reference to income is £13,190 and £17,965)? Yes you can, if you meet the disability tests as that raises the income threshold.
If you are 50 or over the benefits position is critical but the required working hours are only 16. Would you have guessed?
It only takes a few more words to guide people properly.
Just not good enough
The campaign logo is a thumbs-up sign. Our conclusion is that this type of campaign is just not good enough and will entrench an incorrect understanding of the qualifying rules for WTC. This misleading “simplification” is something which we pointed out to HMRC three years ago when they promised not to do it again. It therefore gets the thumbs-down from us.
We hope HMRC will change this campaign and soon.
Contact: John Andrews (0844 579 6700 Fax 0844 579 6701)