Families biggest losers in cuts to the bone
Published 21/10/2010 | 05:00
There were never going to be any winners from yesterday's UK government spending review but families with children look set to be among the biggest losers.
The government had previously announced that from January 2013 a family where one parent is a higher rate taxpayer will no longer qualify for child benefit, regardless of the household's overall income.
As a result, a family where one parent earns more than £44,000 a year will be up to £1,750 a year worse off, according to chartered accountants Blick Rothenberg.
But families received further bad news yesterday when the British Chancellor George Osborne announced a reduction in the percentage of childcare costs that people could recover through the working tax credit from 80pc to 70pc, meaning couples who qualify for the benefit will effectively have to pay 10pc more for their childcare themselves.
Couples with children will also have to work for at least 24 hours a week between them in order to be eligible for the working tax credit.
Families whose incomes are rising will also lose out from changes to the way tax credits are calculated, with real-time information being used rather than payments being based on information from the previous tax year. As a result, people whose income increases may stop receiving the benefit sooner than was previously the case.
Families may also be hit by a cap on the level of benefits they can receive of £500 (€567) a week. But on the plus side, if the couple is entitled to child tax credits, they will see the child element of the benefit increase by £30 (€34) per child in 2011 and by £50 (€56) in 2012.
Single people on low incomes also look set to lose out, with the government placing a cap on the level of household benefits single adults can receive of £350 (€397) a week.
The government is also freezing the basic and 30-hour elements of the working tax credit for three years.
Individuals with rising incomes could also be hit by the shift to real-time information for tax credit calculations, in the same way that families will be.