Tax Credits and benefits
There were some small announcements in this year’s Autumn Statement concerning Tax Credits and other benefits.
The transition from ‘Tax Credits’ to the new ‘Universal Credit’ replacement has been far slower than predicted. Whilst we envisaged that a high percentage of Tax Credit claimants would have been transferred over onto the new system by now this has not yet happened and we are currently still running both systems side by side.
For anybody within the Universal Credit system the main announcement in the Autumn Statement was a reduction in the income taper rate. The current income taper rate is 65%, which means that when a claimant earns above the work allowance their benefit is gradually withdrawn, so for every £1 over the limit they have historically got to keep 35p of their award. From April 2017, this taper rate will reduce to 63% thus allowing claimants to retain more of their money, which is fantastic news.
The Chancellor announced that ‘work always pays’.
Another announcement was that new Tax Credit claims can be made online from April 2017, as opposed to claims only being allowed over the phone or by post.