HMRC are warning you to be aware of these scams as the tax credits deadline approaches. We look at how you can avoid tax credit fraud and highlight the important dates you need to know when renewing your tax credits.

Be careful of ‘phishing’ emails that look like official tax credit renewals

Phishing emails often suggest that you are owed a tax credits rebate. They will generally  include a link which diverts you to a fake HMRC website where you will be asked for personal information such as your bank or card details.

The BBC reports that some 147 scam websites were closed down last year in countries around the world.

“HMRC will never ask you to disclose personal or payment information by email,” said Nick Lodge, director general of benefits and credits at HMRC.

“We are committed to your online security, but the methods fraudsters use to obtain information are constantly changing, so you need to be alert.”

Scam emails are set to increase in number as the tax credit renewal deadline appears and more and more people are dealing with their tax credit application. Keep reading for everything you need to know about the 2013 tax credit deadline.

What you should know about the tax credit renewal deadline

Do you want to claim tax credits for the first time? Or, do you want to keep receiving the benefit? If so, you have to submit your tax credit claim by 31^st July 2013.  If you miss the deadline, your payments could stop immediately.

Important dates

19 April 2013 – first tax credits renewal packs sent out

28 June 2013 – final tax credit renewal packs sent out

31 July 2013 – tax credit renewal deadline

If you don’t receive your renewal pack by 28 June 2013, contact the Tax Credit Helpline for help.

Experts are urging you to renew your claim by the deadline.  The Daily Mirror says that ‘it may seem a hassle to renew tax credit claims every year, but it’s important to ensure you get paid the right money.’

Your Annual Declaration Form

You should complete your Annual Declaration (TC603D or TC603D2) as quickly as possible and definitely no later than 31 July.

If you delay renewing, you could be paid too much tax credits (an ‘overpayment’) that you have to pay back. This could build up the longer you leave it before renewing.

Your Annual Review Notice

If you have only been sent an Annual Review notice (TC603R), you don’t need to renew your tax credits as your claim will be renewed automatically. However, you should tell the Tax Credit Helpline straight away (and no later than 31 July) if:

• you have had any changes in circumstances
• your income is different to what’s shown in the notice
• there are mistakes or details missing from the notice

Have you received a scam email? Have you renewed your tax credits in 2013? How did you find the process? Share your thoughts in the comments below.

But, what do the changes mean? And how do they affect you? Keep reading our simple guide to find out.

Who will universal credit affect?

Universal credit will affect you if you receive one of the six benefits above. This will affect millions of people, as the chart below shows:

Why is the tax credit and benefits system changing?

The government believe that the benefits system currently provides few incentives for people to return to work. So, their aim is to create a greater incentive to take a job and reduce the number of homes where no adults work.

The changes are also designed to make the system easier to understand and simpler to administer – aving money in the process.

How is universal credit different to the existing system?

One of the main changes that the new universal credit will bring is that you will be required to apply online and manage your claim through a web based account.

It will also merge various out of work and in-work benefits and is designed to provide an incentive to claimants to take a job.

Another change is that universal credit payments will be made on a monthly basis, into your bank account. And, support with housing costs will be paid to you with your monthly payment, not directly to your landlord.

When will universal credit come into effect?

Universal credit is scheduled to start with new claims from unemployed people in October 2013. If you are in work, the process will begin in April 2014. The remainder of current claims will be moved to universal credit from 2014, with the process being complete by 2017.

Does it replace all benefits?

No. A large number of benefits remain, including:

• Carer’s allowance

• Contributory Employment and Support Allowance

• Bereavement benefits

• Industrial injuries disablement benefit and war pensions

• Child benefit and guardian’s allowance

• Social fund maternity, funeral, winter fuel and cold weather payments

• Other benefits such as free school meals or free prescriptions to which claimants on certain other benefits and/or tax credits are automatically entitled

Is the Universal Credit going to affect you? Please share your thoughts/concerns in the comments below.

We’re film fans here at Tax Credits.  So, amongst our invaluable tax credits advice, we occasionally like to recommend a finance themed movie which we think you will enjoy.  So, sit back and enjoy our review of Richard Gere’s new Wall Street movie, Arbitrage.

Over recent years, there haven’t been many films about the consequences of the credit crunch. Wall Street 2: Money Never Sleeps disappointed and so the best film so far about the financial crisis has been 2011’s Margin Call, starring Paul Bettany, Jeremy Irons and Kevin Spacey.

Arbitrage may be about to give that a run for its money, though. Written and directed by newcomer Nicholas Jarecki, Arbitrage begins with Robert Miller (Richard Gere) celebrating his birthday and the fact he is about to sell his hedge fund business in a multi-million dollar deal. On the face of it, all seems well: Miller is rich, has a beautiful wife (Susan Sarandon) and is about to make a huge sum on the sale of his company.

However, we quickly discover that Miller’s life is not quite as it seems. His business deal is at risk and he isn’t the devoted family man that we’re led to believe. When an unexpected turn of events leaves Miller very much stranded alone, he turns to 23 year old Jimmy (Nate Parker) – a family friend who he has helped in the past.

Miller manages to cover his tracks but his web of deceit is beginning to entangle him. With both his employees, family and police starting to ask questions, can the multi-millionaire socialite extricate himself from his self-made problems and get his comfortable life back?

Arbitrage is a business term, often used in gambling, and is the practice of taking advantage of a price difference between two or more markets. Effectively, arbitrage gives you the potential of a risk-free profit at zero cost. We discover in the middle of this film that this approach is what has got Miller into his financial mess, and from then it is a game of brinkmanship with the potential buyer of his company to close the deal.

While Arbitrage may not be the best financial drama ever made, it’s hard to take your eyes off Richard Gere who is at his mesmeric best in this role. He manages to make the audience root for a morally duplicitous character and, by the end, you almost want him to get away with the things that he has done, even though he’s clearly a crook. It is one of the best performances of the actor’s long and distinguished career and elevates Arbitrage from a run of the mill thriller into something more.

Gere is ably supported by Susan Sarandon – underused, in my opinion – and the terrific Nate Parker who plays a young man backed into a corner by Gere’s behaviour. There’s also a lovely turn from Tim Roth as an NYPD cop determined to finally bring down one of the rich elite.

Considering this is Nicholas Jarecki’s first film, it is an assured and impressive debut with a strong cast. While it may not shine much of a light on the cause or ramifications of the financial crisis, Arbitrage is a taut and tense drama with a magnificent central performance from Richard Gere that rightly won him a Golden Globe nomination. Highly recommended.

Arbitrage (2013). Director: Nicholas Jarecki. Starring: Richard Gere, Susan Sarandon, Brit Marling, Nate Parker, Tim Roth

And, The Guardian reports that ‘low-income households are among the big losers from the budget.’ Indeed, the government’s own analysis reveals that in the 2013/14 tax year the bottom 10 per cent of households by income will be £200 worse off, compared with 2010-11.

We have put together this useful guide to the changes that will affect Tax Credits and other benefits after April 2013. Keep reading to learn how these changes will affect you.

Changes to tax credits in 2013

The main elements of tax credits will not rise at all in the 2013/14 tax year, equating to a real terms cut. This includes the basic element of the working tax credit (WTC), which stays at £1,920, and the family element of the child tax credit (CTC), which remains at £545.

From 6 April 2013, the child element of CTC rises by £30 a year (57p a week) to £2,720. In addition, the disabled child element will go up by £65 to £3,015 a year. Most key benefits and tax credits will rise by just 1 per cent a year, which The Guardian says is ‘below projected inflation and a 4 per cent real terms cut.’

The total amount of tax credits that you can claim for is reduced by 41p for every £1 earned over £6,420 – and this figure is also frozen for the coming tax year. The government online calculator at gov.uk/tax-credits-calculator gives an idea of what you can claim.

The introduction of a benefits cap

From 2013, there will be a £26,000 cap on the total amount of benefits that you can receive if you’re a working-age person in the UK. This includes jobseeker’s allowance, housing benefit, child benefit and carer’s allowance. This will limit your benefits to £500 a week for families, or £350 for childless single-adult households.

This cap will be introduced in April across four London boroughs and then rolled out by the end of September.

Bear in mind that this benefit cap will not affect you if you, your partner or any children that you are responsible for qualify for a number of benefits, such as disability living allowance.

The ‘bedroom tax’

Are you aged between 16 and 64 and on housing benefit? If so, from April 2014 your housing benefit will be reduced by 14 per cent if you have a spare bedroom or by 25 per cent if you have two spare bedrooms.

Children under 16 of the same gender are expected to share a bedroom while children under 10 are expected to share regardless of gender.

Council tax benefit

Council Tax benefit will end on 1 April 2013. Local councils are expected to deliver a replacement scheme for non-pensioner residents on a low income and while pensioners are protected, in general the most anyone of working age will receive is 85 per cent of their council tax bill.

Do these changes affect you? Please share your comments below.

Every country has its own tax regime and policymakers choose how they raise money to fill their nation’s coffers. And, some countries charge higher tax rates than others.

The chart below shows the OECD countries and how much tax they collect as a percentage of their national output (GDP). A dark colour means a country collects higher taxes and a lighter colour means the nation collects a lower portion of their GDP in tax.

There are a number of interesting conclusions to be drawn from this chart. Firstly, we can see that several of the most advanced countries in the world collect relatively little tax as a proportion of their GDP. The USA, Australia, South Korea and Japan appear towards the bottom of the list.

European countries collect the most tax, with Denmark’s total tax take equivalent to just under half its national output. Almost a quarter of Denmark’s revenue (24.3 per cent) comes from tax on personal income, compared to 10 per cent in the UK and just 8 per cent in the USA.

The chart also outlines what taxes contribute most to a nation’s Treasury. For example, Hungary, Sweden and Greece all claim a higher percentage of their taxes on consumption than the OECD average. France, the UK and the USA all take higher than average taxes from property. And, Australia, New Zealand and South Korea take a higher proportion from corporate income.

How does your country compare? Do you pay ore or less taxes than average? Share your thoughts in the comments below.

The BBC has reported that ‘multinationals such as Amazon and Google have…come under fire for paying little UK tax.’ Prime Minister David Cameron has called for global action on tax avoidance while many people are boycotting companies such as Amazon and Starbucks because of their tax practices.

However, data for Tax Credits shows that Amazon actually pays an effective corporation tax rate of 60.8 per cent, higher than other companies including Visa, Samsung, Coca-Cola, McDonalds and HSBC. The online retailer most recently paid £1.88 million of corporation tax on profits of £3.092 million, according to the company’s latest accounts. Almost two thirds of Amazon’s profits went on UK business tax.

The 2011 rate of corporation tax in the UK was 26 per cent and many other large companies paid an effective business tax rate higher than this. Nestle paid £12,208,000 in tax on profits of £23,552,000 – an effective rate of 51.83 per cent. Wal-Mart’s effective tax rate was 42.96 per cent, Unilever’s was 34.58 per cent and Microsoft paid an effective tax rate of 28.59 per cent.

Other major firms did pay tax at well below the 26 per cent rate, however. Kraft, who bought Cadburys in 2011 – paid no corporation tax on profits of £16,873,000 and turnover of over £1.2 billion. Other companies who paid no corporation tax in their last accounts include Starbucks, BP, Toyota and Google.

The data below shows how much UK corporation tax a number of major companies pays. It also shows their tax payments as a proportion of their turnover.

What do you make of these figures? Should major companies be forced to pay more tax? Please share your thoughts below.

Twice a year, the government produces information on the number of people claiming various benefits in the UK. So, here’s a guide to tax credits and benefits in numbers.

Benefits in numbers

The latest bi-annual National Statistics on benefit claimants produced by the Department for Work and Pensions were released on 14 November 2012.

5.9 million – number of working age benefit claimants in February 2012
£3.1 billion – Amount of housing benefit that Brits failed to claim in 2009/10
2.62 million – Pension Credit claimants in February 2012
1.6 million – Number of people who failed to claim the Pension Credit they were entitled to in 2009/10
£3 billion – amount of tax credits paid every year to people who are wealthier than average
£230 billion – estimated total UK welfare bill in 2016
584,000 – The number of lone parents claiming Income Support in February 2012
£1.95 billion – Amount of Jobseeker’s Allowance that Brits failed to claim in 2009/10
5.05 million – Number of people claiming Housing Benefit in February 2012
£26,000 – planned household benefit cap
21,000 – the fall in the number of working age claimants of ESA and incapacity benefits in the year to February 2012
32.4% – the percentage of total government spending that will go on welfare by 2016
32% – the percentage of all benefits paid in 2011 that went to people who are wealthier than average
£57.6 billion – the amount paid out each year in Basic State pensions

The top 10 biggest benefits/tax credits

While many people that believe the welfare system is simply designed to help people who are out of work, the truth is that Jobseeker’s Allowance and other well known benefits form a relatively small part of the overall welfare budget.

The top 10 benefits and tax credits in the UK, by total size of the bill, are:

1. Basic State pension

2. Housing and Council Tax benefits

3. Tax credits

4. DLA and Attendance allowance

5. State second pension

6. Child benefit

7. Incapacity benefits

8. Pension credit

9. Income support

10. Jobseekers allowance

(source, Daily Telegraph)

So, do you think the tax credits and benefits system needs reform? Share your views on these figures below.

Our easy to use guide explains everything you need to know about these Child Benefit changes.

What are the changes?

In November 2012, you will receive a letter if you earn more than £50,000 and you live at an address where child benefit is received. This letter will explain how your family is likely to be affected.

The letter says:

                “If these changes apply to you or your partner, you should jointly decide whether to:

                stop getting child benefit from 7 January 2013, and avoid the new charge, or

                keep getting child benefit after this date and declare the payments for income tax purposes”

Child benefit currently stands at £20.30 a week for the first child and £13.40 for each child after that.

Families where one parent earns between £50,000 and £60,000 will have their benefit reduced on a sliding scale, and will only lose the benefit entirely when earning over £60,000.

Child Benefit in Numbers

7.9 million - number of families claiming Child Benefit

13.7 million - children being claimed for

£50,000 - Your Child Benefit will start to reduce if you earn over this amount

1.2 million - people affected by the changes

£20.30 - weekly child benefit for your first child

£13.40 - weekly child benefit for each other child

£60,000 - Your Child Benefit will stop if you earn over this amount

£4,000 - Equivalent pay cut of losing Child Benefit for 3 children

7th January 2013 - Date the changes come into effect

500,000 - additional people who will have to complete a tax return

82 - percentage of people in a poll who supported the cut

Complicated changes could see you having to complete a tax return

The changes to child benefit are complicated. The BBC reports that families earning more than £60,000 have two options. You can:

Choose to give up the benefit entirely

Have it clawed back through your tax return

Alex Henderson, a tax partner from PwC, the accountants, said: “HMRC’s helpline is likely to be pretty busy. In the new year there is likely to be a flood of further queries as people begin to deal with self-assessed tax returns or tax codings to claw back the benefit. Given the timing issues, and the complexity and novelty of these changes, there could well be pinch points for HMRC and consequent delays in responses.”

Will you be affected by the Child Benefit changes? Share your thoughts below.

The Government certainly think so, and there are plans in place to overhaul the tax credits system through the ‘Universal Credit’ planned for 2013. Here, we look at whether the existing tax credit system is too complicated and what the new changes might mean for you.

Complex benefit and tax credits system means billions go unclaimed

Figures from the Department for Work and Pensions (DWP) show that billions of pounds worth of benefits go unclaimed each year. The BBC reports that up to £2.8 billion in pension credit, used to top-up pensioners’ weekly income, is not taken up, while over £3 billion in housing benefit was not being claimed.

Charity Age UK has called on the government to make people more aware of what they are entitled to, calling the loss to pensioners ‘staggering’.

The most recent figures, which refer to 2009-10, show that:

• Up to 620,000 people failed to claim up to £2 billion in income support, and employment and support allowance
• Up to 1.6 million people failed to claim up to £2.8 billion in pension credit
• Up to 1.1 million people did not claim up to £3.1 billion in housing benefit
• Up to 3.2 million people did not claim up to £2.4 billion in council tax benefit
• Up to 610,000 people did not claim up to £1.95 billion in jobseeker’s allowance

So, with the current system so complicated that billions of pounds in tax credits and benefits are going unclaimed, the Government has decided to change the system. We look at these changes next.

Government plan to simplify the system

Mike Dixon, assistant chief executive of the Citizens Advice Bureau, believes that the complexity of the benefits and tax credits system makes people reluctant to claim. He says: “It’s really hard to understand at the moment. People moving into work have to move from one benefit to another, which makes them nervous.”

And, the current tax credits system may not be working. Tax credits are designed to help people off benefits by making work pay. However, analysis by the Institute for Fiscal Studies (IFS) shows that those who are most dependent on benefits – the poorest families – face a steep withdrawal of benefit when they move into work. It found that 1.5 million people are on an effective tax rate of 70 per cent to 100 per cent when they began working.

In 2013, the government will launch the biggest reform of benefits since the modern welfare state was introduced in the 1940s. It includes the introduction of the ‘universal credit’, which will merge six benefits – child tax credit, housing benefit, jobseeker’s allowance, income support, working tax credit and employment support allowance – into one monthly payment.

James Browne of the Institute for Fiscal Studies said: “The current system is more complicated than it needs to be and the government has decided to simplify it by integrating most means-tested benefits for working-age people. However, the rules for calculating universal credit will still be complicated.”

And, not everyone will benefit from the universal credit. The IFS calculates that 2.5 million families will gain, 1.4 million will lose out and 2.5 million will see no change. The main people who will gain are those people for whom going into work is least economically attractive.

Keep heading back to taxcredits.net over the next few months for all the latest news on universal credit and how it will affect you.

How will these tax credit changes affect you and your family? Keep reading to find out.

Government plans to reduce Child Tax Credit

The Government’s most controversial plan is to deprive unemployed parents of extra support if they have another child. The Daily Mail reports that ‘Treasury sources said child benefit, income support or tax credits could be withheld, putting the jobless in the same position as struggling working parents who simply cannot afford to have larger families.’

The Chancellor has proposed that child tax credits would be cut for families with more than three children.

Writing in the Daily Mail, George Osborne and Iain Duncan-Smith ask: “Is it right that people in work have to consider the full financial costs of having another child while those who are out of work don’t?”

The current system of tax credits and how changes will affect you

The table below shows the maximum amount of Child Tax Credits you can currently receive for bringing up children (if you qualify).

The government proposals would mean a cap on some benefits and tax credits. For example, if tax credits were limited to the first three children, households with larger families would potentially lose their entitlement to some of the ‘child’ element, which would reduce a household’s income by up to £2,690 per child per year. There are around a third of a million unemployed families with three or more children that would be affected.

According to analysis by the Institute of Fiscal Studies (IFS), Mr Osborne would have to take an average £3,000 a year from the 330,000 out-of-work families with three or more children to save £1 billion a year from this group.

Another proposal which could save the Government around £2 billion a year would be to freeze benefits and tax credits. According to the IFS, the Government could scrap the link between benefits and inflation next April. This would cut £2 billion from the welfare budget. However, it would mean that families would not receive an increase in their tax credits despite rises in the cost of living.

Many have been critical of the Chancellor’s plans. Rachel Reeves, Labour’s Shadow Chief Secretary to the Treasury, told ITV News that ‘his deep cuts to tax credits have left thousands of working parents better off if they quit their jobs.’

Do you have three or more children? Could you survive if your tax credits were cut by £3,000 a year? Share your thoughts in the comments below.