Devolution is making it harder for claimants to understand the benefits system and the Scottish and UK governments need to work harder to ensure people claim what they are entitled to, according to the Low Incomes Tax Reform Group (LITRG).
In written evidence to the Scottish Parliament’s Social Security Committee inquiry into benefit uptake, LITRG – an initiative of the Chartered Institute of Taxation (CIOT) – cite a number of areas where the experience of claiming benefits can be further complicated because of devolution2.
An increase in the number of agencies responsible for administering benefits
Confusion around the rules for eligibility for certain ‘passported benefits’ (benefits or schemes that a person is automatically entitled to because they receive other benefits or tax credits
A lack of clear signposting, or a one-stop shop, for claimants to know who to contact for support in the claims process. Research conducted for the CIOT last month highlighted confusion among Scots about who to approach for advice3
LITRG is also calling on the committee to widen the scope of its inquiry to consider the interaction between benefits and income tax and National Insurance, arguing that complexity and confusion within the system has increased because of devolution and is impacting Universal Credit recipients.
Victoria Todd, Head of LITRG team, said:
“It is already challenging and stressful for people to claim benefits, but the devolution of tax and welfare powers to Scotland has increased complexity and confusion within the system, making it all the more important that the UK and Scottish governments work together to ensure people know what they are entitled to and where to go for advice.
“Some of the common issues we have encountered include claimants not knowing what agency to contact for help and confusion around eligibility for passported benefits, because the rules for these can be different in Scotland from the rest of the UK.
“The way that income tax powers are devolved to Scotland has also had an impact on Universal Credit (UC) recipients in employment. They may find that the amount they earn from work has increased because of the new Scottish tax rates, but that the ‘taper rate’ reduces the amount of benefit they receive.
“Maximisation of benefit take-up is more likely to occur when the system is simple, stable and clear to understand. MSPs should take these concerns on board as they consider how to improve benefit uptake in Scotland”.
Notes for editors
1. A copy of LITRG’s evidence to the Social Security Committee can be accessed here.
2. The evidence provided by LITRG to the committee is based on queries received to its website and by proactive monitoring of various chatrooms and online forums. In 2018, there were nearly five million visitors to LITRG websites.
3. In an opinion poll conducted by the Chartered Institute of Taxation by Mark Diffley Consultancy and Research in September 2019, respondents were asked to identify the agency they should contact for advice with a range of tax and benefits queries. Further information available here.
4. Low Incomes Tax Reform Group
The LITRG is an initiative of the Chartered Institute of Taxation (CIOT) to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.
The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. The CIOT’s 18,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.
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