If tax credits are your salvation, what about the families they've damned?

If tax credits are your salvation, what about the families they've damned?
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As many charities will testify, the scheme is not only complicated but has been plagued by administrative errors and computer glitches. Together, these elements have inflicted distress and frustration on thousands of families as incorrect sums of money have been both paid into - and then pulled out of - their accounts.

The struggles with tax credits are well documented and Gordon Brown's Budget last month only added fuel to the fire. His abolition of the "starter rate" 10 per cent tax band was criticised for hitting the less-well-off, who will, from next year, have to pay tax at the new basic rate of 20p on any income over their personal allowance.

The Treasury defended this move by announcing extra cash via both child tax credits (CTCs) and working tax credits (WTCs). But many question whether the revalued benefits will offset the tax changes.
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It is now seemingly a necessity for those with incomes between £5,255 and £18,605 to get to grips with the tax credit system and claim in order to negate their losses through other tax measures," says Francesca Lagerberg of accoun- tants Grant Thornton.

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In the 2005-06 financial year, Citizens Advice dealt with more than 150,000 problems relating to WTC and CTC. Its figures suggest one in three claimants have been overpaid - leaving many in dire straits as Revenue & Customs tries to claw back the money.

"Families are finding themselves struggling to repay large amounts without receiving proper explanations of how the liability has arisen - and without being given notice before [the debt] recovery starts," says Ms Lane. "Thou- sands of families are also being threatened with court action for the recovery of overpayments - sometimes without even knowing the amount due."