2 THE TAX CREDITS SCHEME
2. In April 2003 the Government introduced Child
and Working Tax Credits with the expressed aim of tackling child
poverty and encouraging more people into work by providing income
related support. In drawing up the new Tax Credits scheme, the
Government looked at systems in other countries, in particular,
Canada—which has a relatively simple and unresponsive system,
with awards based on income from the previous year—and Australia—which
has a highly responsive system.[1]
The Government concluded that neither model could be replicated
precisely in the UK and sought to design a system that steered
'a course between the two'.[2]
It was decided that the UK system would be responsive to changes
in circumstance (such as family size, childcare costs and disability);
to all falls in annual income; and to rises in annual income of
more than £2,500 a year.
1 HM Treasury and Inland Revenue, The Child and
Tax Working Credits, April 2002, p 22 Back
2
Ibid. Back
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