HMRC's website provides a series of questions and answers about the transfer of payments of Working Tax Credit (WTC) from employers to HMRC from November onwards.

A number of employers have queried why it is necessary for them to send letters to their employees explaining the change, effectively duplicating the letter that HMRC is going to send out. This is one of the questions tackled by HMRC on the FAQ page. The answer given is: "The best way of preparing employees for the change is for both the Government and employers to communicate directly with those employees who will be affected. This targeted letter will reinforce the message that employees will get from HMRC."

A more detailed discussion of the reasons why a legislative approach to the employer's letter was taken is given in the Explanatory Memorandum to the Regulations (link below) that enforces the requirement. One of the key policy objectives behind the change to the payment of WTC by HMRC was that the measure "does not weaken the visible link between work and receipt of WTC that [payment by employer] currently provides". It was decided, therefore, that communication by employer as well as by HMRC was necessary. The Explanatory Memorandum describes the six options that were considered by which employers could communicate the change and why a combination of posters and a single targeted letter was chosen.

Two further questions and answers have recently been added to the FAQ page, making it clear that:

• it is acceptable for the letter to be sent to all employees, not just to those receiving WTC through the payroll, as long as it is made clear that the letter is intended only for those who currently receive their WTC with their pay.
  
  
• it is also acceptable for the letter to be sent to employees using the workplace intranet site, as long as the message makes it clear that it is intended only for those employees who currently receive their WTC with their pay, and the message is clearly highlighted to make sure that such employees find and read the message. It is also suggested that employers include some internal checks to reassure themselves that the intranet message is reaching all of the affected employees.

...back to 29 September 2005

Sources:
Employer's - Phasing-out of PVE
The Tax Credit (Payment by Employers etc.) (Amendment) Regulations 2005

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