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.
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.