Understanding the compliance costs of benefits and tax credits
Compliance costs capture time, financial and psychological costs for individuals in fulfilling requirements placed on them by the law and statutory authorities. This research explored how to apply this concept, used for many taxes, to social security benefits and income-related tax credits. Although government departments must estimate the impact of regulations on employers and public/voluntary sector bodies, there is no obligation to do so for individuals. But knowledge of the scale and distribution of compliance costs is needed for accurate cost-benefit analyses of changes to the structure of benefits/tax credits.
This project argued for considering such costs for claimants, and evaluated practical methods to investigate them, laying the groundwork for more detailed investigation later. It included literature reviews and documentary analysis, interviews with benefit/tax credit advisors, and seminars with academics, policy-makers and practitioners to explore the concept and practicalities of measuring compliance costs of benefits/tax credits.
In September 2011 the National Audit Office published a report on means testing which relies heavily on the evidence from the IFS report in its conculsion that: "It will be difficult for government departments to achieve value for money from means-tested benefits unless government understands the impacts of means testing, learns from past experience and improves coordination between different benefits."
Ms Fran Bennett, Oxford University
Grant amount and start date:
1 January 2008
Understanding the Compliance Costs of Benefits and Tax Credits, Bennett F, Brewer M and Shaw J, London: Institute for Fiscal Studies, 2009
Article available for download on IFS website.
- Redistribution and insurance across the lifecycle
- Is the winter fuel payment counter-productive to energy policy?
- How the tax and benefit system relates to ageing and care
- Designing a 21st Century Business Profit Tax
- IFS Green Budget
- Responses to changes in marginal tax rates for high earners
- Care and support of older people living in the community