In receipt of tax credits
- All of the statistics below concern households in receipt of tax credits over and above the (non-means tested) family element.
- In April 2011, 280,000 working, working-age households were in receipt of tax credits over and above those just receiving the family element of Child Tax Credit. This is double the number of a decade ago. It represents around 16% of all working-age households.
- Much of the increase is due to the wider eligibility criteria that were introduced as part of the introduction of the Working and Child Tax Credits (which replaced the Working Families Tax Credit in April 2003). Since 2003, there have been further, but smaller, increases in the numbers.
- The proportion of the population in receipt of tax credits is lower in Aberdeen and Edinburgh than elsewhere. Glasgow also has a below-average proportion, whilst the authority with the highest proportion is Dumfries & Galloway.
- Scotland has a lower proportion of households who are in receipt of tax credits than most other regions in the United Kingdom: lower than all the regions bar those in the south east of England.
- See the UK indicator on tax credits.
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Tax credits are a form of means-tested benefit for working households. In April 2003, the Working Tax Credit (WTC) and Child Tax Credit (CTC) replaced the Working Families Tax Credit (WFTC) and Disabled Person's Tax Credit (DPTC). These, in turn, had been introduced in 1999 to replace Family Credit (FC) and Disability Working Allowance (DWA).
CTC includes a family element which is paid to any household with a dependent child with an annual income of less than £50,000. Households receiving only this family element are excluded from this indicator (on the grounds that even most above-average income households with children receive it).
To allow comparisons both over time and between groups, the number of families in receipt of tax credits needs to be divided by the size of the total population. However, there are no population estimates for the total number of working-age families. As a proxy, the total estimated number of working-age households is used as the denominator in all the graphs (see the page on households, families and benefit units for a discussion of the differences between 'households' and 'families').
The first graph shows the number of working families in receipt of tax credits (and their equivalents in previous years), expressed as a proportion of the total number of working-age households.
The second graph and map show, for the latest year, how the proportion varies by local authority.
The third graph shows, for the latest year, how the proportion in Scotland compares with the rest of the United Kingdom.
Care has been taken to ensure that the data is on a like-for-like basis. In particular:
- The data from 2003 onwards is total recipients of either WTC or CTC in the stated month excluding both those just receiving the family element of CTC and those who are out of work.
- The 2001 and 2002 data is total recipients of either WFTC or DPTC in the stated month.
The reasons for these inclusions and exclusions are as follows:
- Those only in receipt of the family element of CTC are excluded from the figures from 2003 onwards because a) they are not in low income and b) their equivalents in previous years are also excluded (essentially, the family element of CTC replaced the Married Couples Allowance, with something called the Children's Tax Credit existing for a short period of time).
- Those who are out-of-work are excluded from the figures from 2007 onwards because, prior to 2007, the equivalent people were counted as benefit recipients rather than tax credit recipients. This is because the child supplements of some out-of-work benefits (although not the base benefits themselves) are now considered by the government to be tax credits rather than benefits.
- Recipients of DWA and DPTC in the years to 2002 are included because the data for WTC/CTC includes disabled claimants.
Note that awards for WTC/CTC run to the end of the tax year so any figures published within a given year should be considered provisional – they are simply a snapshot of the situation on one day. Claimants are constantly entering and leaving the system and their awards are not finalised until the end of the tax year when their income for that year is known.
The data source for all the graphs plus map is HM Revenue & Customs.
- For the first and third graphs, the total number of working-age households has been estimated by multiplying the total number of households in each year by the proportion of total households who were of working-age in the 2001 Census (there are no published annual estimates for working-age households).
- For the second graph and map, 2001 Census population estimates have been assumed to apply. This is because there are no estimates for how the number of working-age households has changed over time by local authority. The number of working-age households used is the number of households where the 'Household Reference Person' is of working age.
- Although not shown on the graph, there were a very small number of households with children in receipt of tax credits in 2001 to 2002.
Overall adequacy of the indicator: medium. All the data is considered to be very reliable and provides an accurate count of the people on those benefit/tax credits. However, the extensive changes in the system from year-to-year makes the data somewhat difficult to interpret.
- See the 2008 Joseph Rowntree Foundation report entitled Addressing in-work poverty.
- See the HM Revenue & Customs website pages on tax credits and tax credit statistics.
- See the HM Revenue & Customs website pages on estimates of the tax credit take-up.