Reply to post: Re: Self-inflicted @AC

NatWest IT cock-up sees 600,000 transactions go 'missing'

Peter Gathercole Silver badge

Re: Self-inflicted @AC

I was thinking about why I was getting downvotes, and it occurred to me that there may be people who don't know what tax credits are in the UK.

They are basically part of the welfare system which is supposed to return tax to workers in low paid jobs, depending on their circumstances. This is supposed to encourage people to keep working in these low paid jobs, rather than giving up and moving to what used to be called unemployment benefit, now jobseekers allowance and income protection support.

The idea was that it would reduce the amount of money paid in benefit, but instead what it does is trap people in low paid jobs that they can't afford to give up, but which offer them no chance of improving.

In many cases, what this does, if treated at face value, is that low paid workers pay negative tax, meaning that not only do they not pay tax, but they get money back.

Something like 5,000,000 families in the UK receive some tax credits, according to government figures, and all households with children which do not have a higher rate tax payer will also receive child benefit.

It is part of the complex tax system that we have in the UK, as envisioned by that <irony>financial wizard</irony> Gordon Brown. I would prefer to see a system where people did not need this level of support (because it's regressive and unfair), and because what it really shows is that either wages are too low, or cost of living is too high in the UK for a significant part of the population.

So, as I said, tax credits are not a windfall, they are part of the regular income in about 1 in 5 of all households in the UK (based on the previous figure, and the total number of households in the UK). This is why it's important. Families rely on it's timely arrival for all sorts of things including food and fuel. That is why this woman is upset.

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