£1bn Tax credit overpayments, but £3.6bn still unclaimed
Tax: Credits not claimed and overpaid
Tuesday, 20, May 2008 03:57
The taxman cut the amount of tax credit overpayments by £700 million in the last year, but £3.6 billion is going unclaimed.
Data from HM Revenue & Customs (HMRC) show in 2006/07 tax credit overpayments stood at £1 billion - down from £2.2 billion in 2003/04.
In total 5.96 million families received tax credits, however, research from unbiased.co.uk, which represents independent financial advisors, shows unclaimed tax credits now stand at £3.6 billion.
David Elms, chief executive of Unbiased.co.uk, said: "People are quite simply missing out on record quantities of free money by failing to claim tax credits to which they are entitled.
"The system has been set up to help those on lower incomes, and quite simply if you don't claim your credit, it expires. Either use it or you will lose it."
Unbiased estimates eight per cent of entitled families fail to claim their Child Tax Credit, resulting in £1,591 million of tax being paid unnecessarily.
Furthermore, one in four pensioners fail to claim their Pension credits, resulting in wastage of just over £2 billion.
The total of £3.6 billion compares with the £2.2 billion unclaimed in the previous year.
Welcoming the fall in overpayments, financial secretary to the Treasury Jane Kennedy said: "The improvements we have made to the administration of the tax credits system have significantly reduced overpayments, increased the flexibility of the system and provided certainty to families.
"Tax credits are providing much needed financial support to six million families, and have helped lift 600,000 children out of poverty since 1997.
"We will continue to build on this success through further improvements to the tax credit system, which I am setting out today."