Tax Credits & a Living Wage.

Tax credits help low-paid families. There are two types: Working Tax Credit (WTC) for those in work, and Child Tax Credit (CTC) for those with children. The Conservatives want to cut the income threshold for WTCs from £6,420 to £3,850 a year from April 2016. The income threshold for those only claiming CTCs will be cut from £16,105 to £12,125. The rate at which those payments are cut is also going to get faster. Currently, for every £1 claimants earn above the threshold, they lose 41p. This is known as the taper rate. But from April, the taper rate will accelerate to 48p.

There will be similar reductions for those who claim work allowances under the new Universal Credit.

Opponents of this say millions of existing recipients, many of whom work but are on low incomes, will be £1,300 a year worse off. Ministers say that taking into account other changes, such as the introduction of the new national living wage, further increases in the personal tax allowance and an extension of free childcare, the majority of existing claimants will be better off.



I agree that tax payers shouldn't be paying for employers who don't pay a living wage to their workers. What I don't get is how the Conservatives think that they can introduce the cuts well before any ameliorating benefits come into force. The new National Living wage doesn't come in till April 2016, but only for workers over 25. There will be a gap during which many people who are already struggling, will find it much harder to make ends meet, putting an extra 200,000 poorer families into working poverty. The Institute for Fiscal Studies estimates that the number of children living in poverty has increased in the last three years from 2.3 million to 2.5 million. It estimates that the measure outlined above would increase that to 2.8 million. The poorest tenth of society will lose around £800 a year as a result of tax and benefit changes in the years up to 2019 - equivalent to almost 7 per cent of their net income

http://www.thisismoney.co.uk/money/news/article-3155062/Summer-Budget-2015-income-tax-changes-glance-better-worse-month.html#ixzz3psZm5EdE

No wonder the Lords asked the Govenrment to think again. Someone had to.