Clause 23 - Payments
Tax Credits Bill
10:30 am
Mr Howard Flight (Arundel and South Downs, Conservative)
I welcome you back to the Chair, Mr. Hood.
Clauses 23 and 24 provide for child tax credits to be paid directly to the carer and for working tax credits to be paid by employers. They do not explicitly say what happens to the large numbers of self-employed people, but I assume that the intent is that they will be paid directly by the Revenue.
In the group of amendments that we are addressing, our amendments take two different lines and raise two separate issues. Amendments Nos. 36 and 35 would provide that working tax credits were not paid by employers but were paid directly to claimants. Amendment No. 37 raises the issue of remunerating employers for the economic costs incurred in making working tax credit payments, and amendment No. 104 raises the issue of the costs incurred in relation to the provision of information to employees. Liberal amendment No. 51 goes down the middle by stating that employees should be permitted to request direct payment to their banks or post office accounts.
There is some important background information to run through. There are currently about 5 million households getting support directly from the tax system. That involves around 300,000 employers in making payments, especially under the working families tax credit. The Carter review, which the Government instigated, found that employers have incurred £220 million of costs since these arrangements were introduced. The Bill extends tax credits to couples and individuals without children, which the Institute for Fiscal Studies estimates would add 250,000 single people and 170,000 working couples to those being paid tax credits by employer.
Overall, the total of 5 million households receiving support from the tax system would be raised to 6 million.