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Farming & Rural Business Community

Tax credit changes

Author: Jon Gifford FCA CTA, Giffords LLP

Published: 08 Apr 2024

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After more than 20 years, the system of Working and Child Tax Credits is finally coming to an end, after many delays.

The tax credits system largely considered the personal taxable income of the claimants. However, although we are at an early stage of our experience of the replacement Universal Credit (UC) system, it seems there are many more constraints with UC; for example:

  1. The self-employed are deemed to earn at least the National Living Wage for the hours that they work, even if taxable income is actually lower
  2. Monthly, rather than annual financial declarations are needed – a big practical issue for many
  3. Scrutiny by the Job Centre around the sufficiency of the hours worked by claimants, including meetings at the Job Centre!
  4. Personal assets are considered

It is very difficult to thoroughly advise clients on this until we experience more, but we understand that there is a 12 month ‘transition’ period for claimants coming across from the Tax Credits system to provide some financial support to those potentially worse off under UC, so many clients are taking the view that they will ‘give it a go’ for 12 months. Of course, it is sensible to advise clients to exercise caution in relying on any money received until their final entitlement has been reviewed and confirmed in due course. Clients should not miss any claim deadlines advised within letters sent.

*The views expressed are the author’s and not ICAEW’s