Business

Low-paid workers urged to claim tax credits by Unison

mother and child Image copyright Getty Images

Public service union Unison is urging a million low-paid workers to claim tax credits as soon as possible, or else lose thousands of pounds.

From 11 April, cuts are being made to work allowances - the equivalent of tax credits - for those who receive benefits under Universal Credit (UC).

The new UC system is gradually being rolled out across the UK.

Those who register for tax credits before UC comes to their area will see their future payments protected.

But those who do not - says Unison - will typically lose more than £50 a week.

A couple over the age of 25, with no children, earning the National Living Wage for 30 hours a week, would be £2,756 a year better off if they register for tax credits before they transfer onto UC, according to Unison.

"If low-paid workers sign up to tax credits, not only will they be better off now, but their income will also be protected in future, unless there is a significant change in their circumstances," said Dave Prentis, Unison's general secretary.

More generous

The Chancellor, George Osborne, originally decided to cut both tax credits and the UC equivalent, work allowances.

But after a Conservative party revolt in the autumn of 2015, he decided not to cut tax credits.

That left cuts to work allowances unchanged.

For example, until now a single parent with no housing costs has been able to earn £8,808 a year before his or her UC payments were affected.

From 11 April that parent will only be allowed to earn £4,764 before payments are affected. Above that amount, payments will be reduced by 65p for every extra pound earned.

Unison said that some people could lose as much as £14,000 over the next five years.

The government has said that claimants will benefit from the new National Living Wage, improved tax allowances and more generous child care allowances.

At the moment only around 200,000 claimants are using UC. The rest will move across by April 2021.

'Call to action'

Lee Healey, whose company IncomeMax advises people on claiming benefits, said it was sensible to claim tax credits if you are entitled to them.

"Far too many people miss out on payments they are eligible for, and claiming tax credits now could mean you are protected when Universal Credit is fully rolled out," he told the BBC.

"Disabled people, lone parents and couples with children in particular could be missing out."

Hannah Maundrell, the editor in chief of Money.co.uk, said, "This is a clear call to action to make checking your entitlement top of your to do list today. Getting your claim sorted now could mean you get more in your pocket later so it's definitely worth doing."

Related Internet links

The BBC is not responsible for the content of external Internet sites