I personally think that removing the poorly paid from any income tax is a great idea. I think anyone on minimum wage should pay no direct tax, and then every pound above this is then taxed accordingly.
I'd pay for this in a fiscally neutral measure whereby the tax rates above this level were adjusted in order to compensate for the lost revenue from the change.
I'd also stick some higher rate charges in there. I've done enough on here on capital flight to show that I'm at least aware of the arguments about it.
I'm not a fan of bureacracy, so the less of it the better as far as I'm concerned. Rather than buggering around with tax credits, I'd just not take it in the first place.