23 May 2008
More should be done to encourage take-up of tax credits, MPs were told as they began an inquiry into the impact of the Budget on low-income households.
Citizens Advice said it was concerned about the low take-up of Working Tax Credit for households without children.
Giving evidence to the Treasury select committee on May 21, Teresa Perchard, director of policy at CA, said there should be a greater push on the issue.
The Institute for Fiscal Studies estimates that the 900,000 people still losing out from the scrapping of the 10% tax band in the Budget, despite the tax allowance increase announced on May 13, are mainly childless households.
Perchard said: 'There are lots of opportunities in the existing system to make that work for people.'
But she added: 'We need to have a look at interaction between different parts of the tax credit and benefit systems. People are being helped in one place and falling off the edge somewhere else.'
She said the number of people being underpaid on tax credits had not really changed, while people were put off by the claiming process.
The IFS warned that 18 million families could end up being worse off over the next two years unless the government extends the 'one-off' income tax cut and winter fuel allowance top-up.
Robert Chote, director of the IFS, described the measures as the 'simple but expensive route'.
The Social Market Foundation told the MPs that the increased personal allowance should be tapered, saying this would compensate all low- and moderate-income people and be cheaper.
PFmay2008
