United Kingdom

In receipt of tax credits

Key points

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Graph 1: Over time

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Graph 2: By region

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Map

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Download a spreadsheet with the district-level statistics

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Graph 3: By income group

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Why this indicator was originally chosen

The system of tax credits is a major Government initiative to tackle the continuing problems of low pay.  These tax credits are more generous than the previous system of benefits that they replaced in terms of both the numbers of people who are eligible and the amounts of money that they are eligible for.  Whilst this indicator does not meet the criterion of it being obvious which is the desired direction for change over time, it is clear that the trends in the last few years have been driven by the changes in eligibility rather than any underlying changes in need and thus that upward trends are currently to be desired.

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Definitions and data sources

Tax credits are a form of means-tested benefit for working families.  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 family with a dependent child with an annual income of less than 50,000.  Families receiving only this family element are excluded from this indicator (on the grounds that even most above-average income families 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 shows, for the latest year, how this proportion varies by region.

The map shows, for the latest year, how the proportion varies by local authority.

Care has been taken to ensure that the data is on a like-for-like basis.  In particular:

The reasons for these inclusions and exclusions are as follows:

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 the first and second graphs plus map is HM Revenue & Customs. The data relates to the United Kingdom.

Note that:

The third graph provides an analysis of the people in families in receipt of tax credits over and above the basic family element of CTC.  The three categorisations are:

The data source for the third graph is Households Below Average Income, based on the Family Resources Survey.  The data relates to the United Kingdom and, to improve its statistical reliability, is the average for the latest three years.  Note that the data is for working families only (i.e. it excludes workless families) and also excludes those only receiving the basic family element of CTC.

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.

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External links

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Relevant 2007 Public Service Agreements

Overall aim:  Halve the number of children in poverty by 2010-11, on the way to eradicating child poverty by 2020.

Lead department

HM Treasury.

Official national targets

Reduce by a half the number of children living in relative low-income by 2010/11.

Other indicators of progress

Number of children in absolute low-income households.

Number of children in relative low-income households and in material deprivation.

Previous 2004 targets

Halve the number of children in relative low-income households between 1998/99 and 2010/11, on the way to eradicating child poverty by 2020, including:

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The numbers

Graph 1

Date With dependent children Without dependent children
May 2001 7.2%
May 2002 7.7%
July 2003 11.8% 0.7%
December 2004 12.2% 1.4%
April 2005 12.4% 1.6%
April 2006 12.2% 1.7%
April 200712.5% 1.9%
April 200812.8% 2.0%
April 200913.2% 2.4%
April 201013.8% 2.9%
April 201114.2% 3.1%

Graph 2

East 15.0%
East Midlands 18.7%
London 14.4%
North East 20.1%
North West 20.3%
Northern Ireland 21.2%
Scotland 16.1%
South East 13.8%
South West 17.1%
Wales 19.5%
West Midlands 19.8%
Yorkshire and The Humber 20.0%

Graph 3

Still in low income 30%
No longer in low income because of the tax credits 23%
Would not be in low income even without the tax credits 47%

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