Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will suspend the tax credit income disregard for reductions in earnings for the financial year 2020-21 to ensure that where earnings fall households' tax credit entitlement takes full account of that loss.
This Government is doing whatever it can to ensure that individuals, families and businesses are supported during the Covid-19 outbreak.
The Government recognises that Tax Credits were introduced in the early 2000s and no longer fully reflect the world of work for many people. That is one of the reasons why we are introducing Universal Credit. Universal Credit replaces Tax Credits and several other legacy benefits, to provide a single system of means-tested support for working age people. Universal Credit is assessed and paid monthly and is based on claimants’ actual earnings in the month, rather than their annual income. As HMRC and DWP are experiencing significant increased demand, the Government has chosen to prioritise the safety and stability of the benefits system overall. That is why we have introduced measures that can be operationalised as quickly and safely as possible in order to provide support to those who need it most.
Suspending the income disregard in Working Tax Credit (WTC) would not benefit claimants on the lowest incomes who are already in receipt of the maximum support available through WTC.
This Government has taken additional steps to support those affected by Covid-19 and has announced a wide-ranging package of measures to support individuals, families and businesses affected by Covid-19. These measures include: