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Tax credits client and adviser experience

20 May 2008

Benefits and tax credits briefing cover

Tax credits were introduced in 2003 to boost the incomes of families with children and those in low paid work. Around £17 billion is paid out to six million households every year. It is more generous than the systems that preceded it and has a high take up rate amongst households with children. For those on the lowest incomes a tax credit award, including childcare, can be worth a substantial part of their weekly income. A lone parent with two children working 20 hours a week at £6 an hour and with £75 weekly childcare costs would, for example, be entitled to around £220 in working and child tax credits. Families on higher incomes receive £10 a week. Tax credits are designed to be responsive to a family's changing home and work circumstances. Awards are based on annual income but take account of current home, work and childcare circumstances. This responsiveness means families can get more money as soon as they need it, but it also contributes to the complexity of the system and means there is an inherent risk of under or overpayments if changes are reported late.

In spring 2007 we carried out research to find out more about what clients understood about the tax credits system and how much their understanding and experiences of the system impacted on their ability to manage their claims successfully. This briefing is based on a summary of research with 15 claimants, 10 advisers and a focus group session with 17 advisers and project staff, all conducted in May 2007. The advisers and clients who took part in this research were taken from the 23 bureaux funded by HM Revenue & Customs (HMRC) in 2006/07 to undertake tax credit take up work in their local communities.

Tax credits client and adviser experience [Adobe Acrobat Document 170 KB]