Are Your On The Right Tax Code And Claiming The Correct Benefits?

28 04 2008

If you have ever checked out the UK tax code system you will know that it is not the simplest of systems to figure out!

Research has shown that not only are many people actually having tax deducted from their income under the wrong tax code, but more and more people are not claiming for benefits which they are entitled to. We are not talking just a few hundred pounds, we are literally talking about billions of pounds of money which goes unclaimed each year – money which has actually been set aside.

Why are some employees under the wrong tax code?

While it would be easy to blame the government for the system and the way changes are recorded, this would not be the whole story. The truth is that more and more people in the UK seem to ignore their own tax situation, the allowances they may be able to claim and ultimately they are giving away money which they are entitled to retain. Tax rates in the UK seem to change on a regular basis (more so as we approach a General Election) but that is really no excuse.

A simple phone call to the tax office will help you to confirm which code you should be on, which code you are on and any money which is due to you for overpayment. Alternatively, although highly unlikely, some people may actually be asked to pay extra tax if they have been on a lower code than they should have been on.

How are people missing out on benefits to which they are entitled?

The UK benefit systems must be one of the more complicated in the world with the authorities often forcing you to “jump through hoops” to get what you are entitled to. This seems to be the main problem, with more and more people just giving up after the tenth form to fill in!

However, one area of society who seem a little more reluctant than most to claim their benefits is the elderly. Many of the older population of today grew up looking after themselves and benefits are something which some of them feel a little embarrassed claiming for. They should not feel this way!

As each change in the tax and benefits system filters through we seem to hear about new and more complicated tax frauds and benefit cheats appearing from nowhere. These are the people who claim for more than they are entitled, while some of the needier of society claim for nothing.

It seems that each new government which comes into power promise the same thing, simplify the tax laws and make benefits easier to claim. However, very few over the last 50 years have actually delivered on their promises, with many now sceptical of how the system is run. Working tax credit has become a shambles, people are being forced to pay back thousands because of incorrect payments and the people who need assistance are often being left out of the loop.

Will we ever find a simple tax and benefits system?



Are Means Tested Benefits Counter Productive?

25 01 2008

Over the last few years the UK government (and other governments around the world) have pledged to try and reduce the massive cost of the UK benefits system which has spiralled out of all control to somewhere in the region of £120 billion a year. While the authorities have taken a number of courses of action they seem to been depending up a system whereby claimants are “means” tested to see what assets and income they already have, where upon their claim may be reduced. But is the means testing system counter productive?

As taxes continue to rise, employment prospects get a little bleaker and the UK economy looks set to take a breather at best many people are being drawn into the world of benefits. While there are many who will agree that the means testing system awards those who need funds most with a larger slice of the benefits pie, many people are now wondering why they are being penalised for being successful . This has prompted a wave of “give aways” whereby those of older years are looking to pass on their asset to their family and friends while they are alive in the knowledge that they will lose these assets any way in the event that they need extra medical care or indeed move into a care home for the elderly.

This passing of assets is covered under strict government rules but there are ways and means of doing it, thereby ensuring that the person giving the gifts will receive full assistance from the state in later life. There are many who would rather not go down this route, the millions who have paid taxes and feel that this is the only way to protect their family’s inheritance. We have all seen stories of families being forced to sell homes and spend savings to cover care which many believe the state should provide.

In many ways it seems that those who are proactive and create their own income are the ones who are bring penalised and those who may not have had employment for some time are benefitting most. Obviously there are occasions where a claimant is unable to take up regular employment or may need extra assistance in some way, but there is no way that the millions who are claiming a whole host of benefits on offer are all unable to work.



Child Trust Fund Take Up Is Disappointing

27 10 2007

While there can be no blaming the authorities who first introduced the Child Trust Fund idea to the UK population, recent figures show a large number of parents have yet to even deposit their Child Trust Fund (CTF) vouchers.  A report released towards the end of last week showed that up to 33% of all CTF vouchers had not been cashed, and as a consequence a number of children look set to miss out on a potential windfall in later life.

What are CTF vouchers?

CTF vouchers were introduced by the Labour government in 2002, and were created to allow bank accounts to be opened in the name a minor.  Those parents who have children born after 1st September 2002 are entitled to a CTF voucher with a value of some £250, which can only be despoited into the childs account.

The scheme is based upon the fact it should also encourage those in a  position, to top-up these accounts (tax free) to ensure that their children, grandchildren, etc have a useful lump sum when they reach the age of 18.  On their 18th birthday the “child” is entitled to take control of the account and spend as they so please.

There have been calls for this type of scheme for many years, and it is a little difficult to understand exactly why so many parents have not taken advantage of the initial CTF vouchers.  The authorities have promised to highlight the plight again, with the aim of bringing the situation back into the limelight and promoting use of the vouchers.

Have you used your CTF vouchers?



The Over 60s Are Not Picking Up Their Full Benefits

27 09 2007

A recent report into the UK benefits system has highlighted the fact that many over 60s are not picking up their full benefit entitlement, with a reported £4 billion going unclaimed each year.  While the authorities claim that this is simple lack of application on behalf of the would be claimants, there are those who paint a more sinister picture. There have been numerous reports about the elderly claiming for various benefits only for the process to stall and drag on for months and months.  It seems that many just given up hope and abandoned their claims.

The fact that the authorities have quoted a figure in excess of £4 billion begs the question, if they know the figure, surely they must know the potential claimants? If so, surely it would be better getting in contact with them directly and arrangement payment, rather than financing a large advertising campaign which may well miss their intended target.  When you consider that there are only 60 million people living in the UK, that £4 billion is a fair chunk of money for every man, woman and child, not to mention an even larger share just for the older of society.

The elderly are not the only ones to suffer with the UK benefits system, a system which has under gone more changes over the last 20 years than we care to remember. New computer systems, new claims forms and new claims are just a selection of the changes which although meant to  resolve the confusion, have in many cases just added to it.  Perhaps there is an opening for a new industry which will basically advise the over 60s of what entitlements which they can claim, because with £4 billion a year at stake there is big money to be paid out.



Government Reject Claims Of £500 Million Tax Credits Write-Off

2 09 2007

While the tax credits system has been under major pressure of late, the announcement that officials from HM Revenue and Customs have actually broken their own rules regarding the reclaiming of over paid tax credits has set more alarm bells ringing.  The cost of this “oversight” is rumoured to be in the region of £500 million, although the authorities insist it is nearer £20 million.

It seems as though a number of claimants over the last few years were unaware of the fact that their payments were being investigated, with many receiving unexpected demands to repay “over payments” from prior years.  Under strict guidelines the authorities should have written to each claimant being investigated, to make them aware of the situation and what may happen - this task was not carried out for many.

To say that the tax credits system has been a shambles is an understatement, with literally billions of pounds of tax payers money wasted.  What was in theory an excellent idea has turned into a nightmare for the government, and Gordon Brown in particular who introduced the system.  It seems that while many claimants had informed the authorities of changes in their situations, the information was never logged into the relevant systems and over payments / under payments have been common place.  The literature which was sent to many claimants was also very hard to understand, with figures changing on a regular basis!

There have been numerous attempts to resolve the problems with the system but it seems that each resolution is followed by another problem, and the authorities are currently in disarray.  Quite where this leaves the long term viability of the system remains to be seen.



To Work Or Not To Work, That Is The Question

18 07 2007

The UK Government have recently announced plans to encourage single parents to return to work as soon as possible, igniting a heated debate about what appears to be a policy u-turn.  Under the Tony Blair regime single parents were encouraged to stay at home with their children up until the age of sixteen, when they should then make themselves available for work.  Has this all changed?

Under changes which will come into play from 2010, single parents will need to make themselves available for employment once their children reach the age of seven (there are plans to reduce the age to twelve from 2008).  A failure to actively seek work may well effect their benefit payments, a strategy which has been criticised by many.  While there is no doubt that certain areas of the benefits system are open to abuse, is this a plausible solution?

The problem for many single parents seems to be childcare, or the lack of a viable affordable system in the UK at present.  Despite numerous attempts to kick start the childcare sector, even local authority run services are often out of the price range of many single parent families.  Again it looks as though employers may be asked to bear the majority of the financial burden for improvements to the childcare system. Unfortunately, while many talk the talk, few often walk the walk with work based childcare services few and far between.

Lets hope that the new government initiative does actually deliver results, but there are many who have major doubts even before the system has been introduced.