Welfare Tax Credits

Treasury written question – answered on 7th June 2007.

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Photo of Frank Field Frank Field Labour, Birkenhead

To ask the Chancellor of the Exchequer when Ministers first requested calculations to be made in relation to the cost of introducing the £25,000 income disregard as referred to in the answer of 13 December 2005, Official Report, column 1836W, on tax credits; and when they received those calculations.

Photo of Stephen Timms Stephen Timms The Chief Secretary to the Treasury

holding answer 23 May 2007

The £25,000 disregard was introduced as part of a balanced package of measures with rights and responsibilities for claimants. Some measures in the package have a cost to the Exchequer while others have a yield. Ministers received information on the Exchequer effect of the package as part of their deliberations leading up to the 2005 pre-Budget report, when the package was announced.

Following publication of the 2004-05 overpayment statistics in May 2006, HMRC had two years of overpayment statistics to inform this costing. Unlike in 2003-04, awards in 2004-05 were based on the previous years' income making them much more representative of future years awards. In addition the first stage of the finalisation process for 2005-06 was completed in August 2006, adding to this body of knowledge. This allowed HMRC to publish a separate cost for the disregard in November 2006.

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