Rebecca Long Bailey – 2015 Parliamentary Question to the HM Treasury

The below Parliamentary question was asked by Rebecca Long Bailey on 2015-12-15.

To ask Mr Chancellor of the Exchequer, pursuant to Answer of 9 December 2015 to Question 18558, how many families in receipt of tax credits in 2013-14 who benefited from the income rise disregard saw their income rise by over £2,500 but no more than £5,000 during the course of the year.

Damian Hinds

As announced in the combined Autumn Statement and Spending Review, the amount by which a tax credit claimant’s income can increase within the year before their tax credit award is adjusted (the income rise disregard), will be reduced from £5,000 to £2,500. This makes the tax credit system fairer so claimants on similar incomes will receive similar awards. Currently two families on precisely the same earnings at the end of the year can receive significantly different awards.

The change returns the disregard back to the level it was between 2003 and 2006 – something the tax credit system is now operationally better able to cope with now that it has more up to date information on people’s earnings through Real Time Information. HMRC are also making it easier to report changes quickly online, so that people will less often receive overpayments. Claimants can contact HMRC if they are suffering financial hardship and are having difficulty paying back an overpayment.

The change will bring forward some of the benefits of Universal Credit so that the tax credit award reflects a claimant’s recent earnings and the system responds more quickly to changes in earnings.