Welfare Tax Credits

Danny Alexander
To ask the Chancellor of the Exchequer (1) how many and what percentage of tax credit claimants have been overpaid more than once since their claim began;

(2) how many and what percentage of tax credit claimants have been underpaid more than once since their claim began.

Jane Kennedy
Tax credits are designed to be responsive to changes in a family's circumstances There will be an under or overpayment at the end of the year if changes are not reported or processed promptly. The Government announced a package of measures at the Pre-Budget Report 2005 to ensure the system strikes the right balance between providing a stable award and maintaining the ability to respond to changes. Once fully implemented this package is expected to reduce the level of overpayments by around a third.

The number and proportion of tax credit awards with more than one overpayment or underpayment, between 2003-04 and 2005-06, is detailed in the following table:

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|Years in which overpayment or underpayment occurred                             |Number of awards with more than one overpayment|Number of awards with more than one underpayment|
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|2003-04 and 2004-05                                                             |528                                            |100                                             |
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|2004-05 and 2005-06                                                             |404                                            |134                                             |
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|2003-04 and 2005-06                                                             |227                                            |78                                              |
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|2003-04, 2004-05 and 2005-06                                                    |260                                            |28                                              |
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|Total                                                                           |1,419                                          |340                                             |
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|Proportion of all tax credit awards in 2003-04, 2004-05 and 2005-06 (percentage)|18                                             |4                                               |
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