The Tax Credits Act 2002 established a framework for the provision of tax credits, primarily aimed at supporting working families, individuals on low incomes, and those with children. This Act introduced two main types of tax credits: Working Tax Credit (WTC) and Child Tax Credit (CTC), which are designed to provide targeted financial support to those who need it most.
The Tax Credits Act 2002 was part of a broader government initiative to reduce child poverty and make work pay by supplementing the income of lower-paid workers and providing extra support for families with children. The Act aimed to simplify the welfare system, encourage employment among those with lower incomes, and provide additional financial assistance to families raising children. The system is designed to ensure that work pays more than welfare and to support the living standards of low-income families.
The Tax Credits Act 2002 remains in force, although it has undergone various amendments and updates to reflect changes in government policy and economic conditions. As part of the UK government's welfare reform, the administration of tax credits is being gradually phased out and replaced by Universal Credit, which consolidates several benefits and tax credits into a single payment. This transition affects how individuals and families receive support, necessitating ongoing attention and adaptation by all stakeholders involved.
