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87/02

16 September 2002

Money with your name on it - Chancellor urges families to claim new tax credits

A new campaign to encourage people to claim their share of an extra £2.7 billion a year for families and children was launched by Chancellor Gordon Brown, Secretary of State for Work and Pensions Andrew Smith and Paymaster General Dawn Primarolo today.

The new Child Tax Credit and Working Tax Credit will provide a simpler and more streamlined system to support families and to make work pay. Around 6 million families are expected to benefit from the new credits.

The multi-media campaign, which includes TV, Radio, Press and online advertising is aimed to ensure that these families and all others who might benefit make their claims in time to receive payments in April 2003 when the new credits will start.

Launching the campaign, Chancellor Gordon Brown said today:

"The Child Tax Credit and Working Tax Credit mark the biggest revolution to the tax and benefits system since Beveridge. They will modernise the existing systems, ensuring better support for children whether or not their parents are in work and making work pay for those without children as well. Six million families will be eligible for support.

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?Instead of a tax credit paid through the wage packet to the main earner, normally the father, we will pay the Child Tax Credit directly in cash or through a bank account to the carer, usually the mother. Up to £2 billion pounds will be transferred from fathers to mothers - providing them and their children with a secure and regular source of income"

Secretary of State for Work and Pensions Andrew Smith said:

"This Government introduced a work first approach because work gives people a stake, it builds their self-esteem and it is the best route out of poverty. Tax credits are at the heart of our strategy to make work pay. Making work pay gets more people into jobs and boosts family income."

Paymaster General Dawn Primarolo said:

?Nine out of ten families with children will benefit from the new child tax credit so it is vital that everyone is aware of the changes and knows how to claim their entitlement.?

?That is why we are publicising the new credits through Television, Radio and Press advertisements to reach as wide an audience as possible. We have made it as easy as possible for people to make a claim: they can find out more and make a claim on-line at www.inlandrevenue.gov.uk/taxcredits. They can also visit one of the Inland Revenue Enquiry Centres or call the helpline on 0800 500 222?

The Child Tax Credit brings together the various strands of support for families with children - the child elements in Income Support, Jobseeker's Allowance, Working Families? Tax Credit (WFTC), Disabled Person's Tax Credit (DPTC) and the current Children's Tax Credit - into one streamlined system. For the first time it will be paid direct to the main carer - usually the mother.

The Working Tax Credit will broadly replicate the adult support in WFTC and extend the principles of WFTC and DPTC to adults without children to create one transparent instrument to make work pay, paid through the wage packet. It will also include support with the costs of childcare, building on the success of the existing childcare component of WFTC and DPTC.

The communications campaign launches tonight and is intended to encourage take-up and inform people that tax credits for children will now be paid directly to the main carer.

The campaign clearly communicates how tax credits are changing and explains who is eligible, what they could be entitled to and how they can claim tax credits or get further information.

The campaign idea, 'It's Money With Your Name On It', is intended to motivate people to claim their entitlement. In other words, they are entitled to this money in recognition of their contribution to the UK - through bringing up children, or working. So, the money is rightfully theirs and they should make sure they claim.

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In the month following today's launch in London, a number of events will be taking place across the country raising awareness of the changes and allowing representatives of local interest groups the opportunity to ask Treasury Ministers and Inland Revenue officials questions about the new system.

Details

The publicity campaign for the Child Tax Credit and Working Tax Credit has 7 main elements:

Direct Mailing

Since mid-August the Inland Revenue has been issuing claim packs to existing Working Families? Tax Credit, Disabled Person's Tax Credit and Children's Tax Credit recipients. The majority of these families will have

received a pack by mid-October and they should all have received a pack by mid-December.

Starting later this year, the Revenue will send out reminders to those families who have received a claim pack but have yet to make their claim. These will stress that a claim should be made in advance of April 2003 to ensure that payment of the new credits can start in April.

TV Advertising

The national TV campaign will be made up of 3 distinct bursts:

• From tonight, an ad announcing the new tax credits and encouraging people to claim.
• From early October, ads aimed at encouraging existing tax credit recipients to make their claim for the new tax credits.
• From late October, a series of case study advertisements which will give an indication of how much money families can get in particular circumstances. These ads will also highlight secondary messages important to particular groups. For instance, they will include information on who can claim for help with childcare costs and how much they can get.

Radio Advertising

The radio ads will complement the TV case study ads, also providing short case studies indicating how much money people in a number of different circumstances can receive. The ads will be spread across several local and national stations including stations aimed at minority ethnic audiences.

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Press Advertising

Ads will appear in national press and will contain more detailed case studies of particular families as well as information on how to get a claim pack or where to make an online claim.

On-line activity

The Tax Credits website is already up and running allowing people to make their claim on-line. It also gives more information on the various elements of the tax credits and the opportunity to go through a quick calculation that gives an indication of what you might be entitled to.

All forms of publicity will include the website address and there will be banner prompts to visit the tax credits site placed on several prominent outside web pages.

Leaflets and Posters

Leaflets and posters publicising the new credits will be made available to Post Offices, Citizen's Advice Bureaux and Local Authority Offices as well as being displayed in all Inland Revenue Enquiry Centres and Jobcentre Plus offices.

The introductory leaflet ?Working Tax Credit and Child Tax Credit: An Introduction? (NTC/1) which provides introductory information on who is eligible for the new credits and how to make a claim will soon be available at all these outlets.

It will be followed by a more detailed leaflet ?Working Tax Credit and Child Tax Credit: A Guide? (NTC/2).

Roadshows

Over the next month Treasury ministers, accompanied by officials from Treasury, Inland Revenue and the Department for Work and Pensions, will be touring the country raising awareness of the introduction of the new tax credits. This will give local interest groups and advisers an opportunity to see the plans for publicising the new credits and will let them know how they can get involved in encouraging people to claim.

The programme of events is:

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Notes for Editors

Expected Number of Families Benefiting From Child Tax Credit by Region

Over the course of the last Parliament, the Government put in place a series of reforms to the tax and benefit system with the aims of:

• supporting families with children, recognising the responsibilities that come with parenthood;
• tackling child poverty by offering the greatest help to those most in need, such as low income families; and
• helping to make sure that work pays more than welfare and that people have incentives to move up the earnings ladder.

The new tax credits are the next stage in this process of reform. They will separate support for adults in a family from support for the children, and for the first time integrate all income-related support for children, to provide a clearer focus on the two aims of:

• supporting families and tackling poverty through the Child Tax Credit; and
• making work pay through the Working Tax Credit.

The rates and thresholds of, and additional money being channelled through, the Child and Working Tax Credits were announced in Budget 2002. This new streamlined system represents an extra £2.7 billion of support for families and those in low paid work. In conjunction with other reforms such as the National Minimum Wage, the Child Tax Credit and Working Tax Credit will make further progress towards the Government's twin aims. As a result of these reforms, from April 2003:

• families with children will be, on average, £1,200 a year better off than in 1997, while those in the poorest fifth of the population will be, on average, over £2,400 a year better off in real terms;
• over 1.5 million fewer children will be living in poverty than would otherwise have been;
• a family with one child and one person working full time at the National Minimum Wage is guaranteed a weekly income of £237.

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The Child Tax Credit

The Child Tax Credit replaces the income-related child elements of out of work benefits (Income Support and Jobseeker's Allowance), the Working Families? and Disabled Person's Tax Credits and the Children's Tax Credit, building on the foundation of universal Child Benefit. The Child Tax Credit will benefit around 5¾ million families.

The new system will offer families with children a number of benefits over the current systems of support. The Child Tax Credit will provide:-

• a continuous stream of income for families with children, which does not depend on the work status of the parents, creating a stable income bridge when families move into work;
• extended eligibility, to some who are currently excluded from all but Child Benefit, such as students and student nurses;
• a system in which all support for children is paid direct to the person with main responsibility for the child's care, in line with Child Benefit;
• a more transparent system which brings together all income-related child payments into a single payable tax credit administered by the Inland Revenue;
• greater flexibility, enabling families to continue to access support from one system, even as their incomes rise or circumstances change; and
• a common framework for assessment, so that most families are part of a single, inclusive system ending the stigma often associated with more traditional forms of support.

As an illustration for families with two children, Child Tax Credit and Child Benefit will work together to provide:

• at least £26.80 a week in support guaranteed for all families;
• £37.20 a week in support guaranteed for families with an income of less than £50,000; and
• £92.50 a week in support guaranteed for families with an income of less than £13,000 a year.

The Working Tax Credit

The Working Tax Credit will make work pay for low income workers. It replaces the Working Families? Tax Credit, Disabled Person's Tax Credit and New Deal 50 plus Employment Credit. It improves on these forms of support by:

• increasing the minimum income guarantee for a single disabled person working full time from £172 a week now to £193 a week in April 2003; and
• improving the work incentives of second earners in couples with children, for example, in a family with two children where the first earner has an income of £14,100 (half average earnings) and the non-working partner takes a part-time job at typical entry wages, the gain to work will increase by over £14 a week in 2003-04 compared to the current system.

The Working Tax Credit will for the first time extend support to those aged 25 or more without children or a disability who work at least 30 hours a week. For this group, the Working Tax Credit means:

• a guaranteed minimum income from full-time work of £183 for couples and £154 for single people; and
• improved gains to work - for a couple where one person moves into full-time work, the gain to work will rise to nearly £50 a week compared with £20 now.

For more details see The Child and Working Tax Credits, published by HM Treasury and Inland Revenue on Budget day (17 April 2002)

Ready Reckoner Tables

The tables below provide a guide to how much claimants can receive for the tax year 2003-2004. The first table shows how much Child Tax Credit a person could receive if they also qualify for Working Tax Credit and they or their partner work 30 hours a week. The second table shows how much Child Tax Credit a person could receive if they do not qualify for Working Tax Credit. The third table shows how much Working Tax Credit a person could receive if they are not responsible for any children or young people. The final table shows how much Working Tax Credit they could receive if they are responsible for one or more child or young person.

The first figure in each column shows the maximum amount available. As the table shows, this maximum is reduced as income (or joint income in the case of a couple) increases.

* This includes dual earner couples where the hours worked by both partners adds up to at least 30 hours a week, provided at least one member of the couple works at least 16 hours.

A higher rate of Child Tax Credit can be paid if the claimant

• has a child under one year old
• has a child with a disability or a severe disability.

* This includes dual earner couples with children where the hours worked by both partners adds up to at least 30 hours a week, provided at least one member of the couple works at least 16 hours.

A higher rate of Working Tax Credit may be paid to claimants who

• are aged 50 or more and have just returned to work after qualifying for out-of-work benefits
• are working and have a disability which puts them at a disadvantage in getting a job
• have a severe disability.

For further information and help

For further information and help customers can visit: -

• Internet- Inland Revenue website
• Helpline - telephone 0845 300 3900, textphone 0845 300 3909

Northern Ireland 0845 603 2000, textphone 0845 607 6078

Open 8am to 8pm 7 days a week, excluding Christmas Day, Boxing Day, New Years Day and Easter Sunday.

• Freephone Response line - telephone number 0800 500 222

Any Inland Revenue Enquiry Centre - look in the phone book under Inland Revenue

Media enquiries should be addressed to HM Treasury press office on 020 7270 5185/5187 or Inland Revenue press office on 020 7438 6692/7327/6706

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Press Notice index 2002 July to December