From the TUC

CSR 2010: Tax Credit cuts

20 Oct 2010, by in Economics, Society & Welfare

A number of complex Tax Credit changes have been announced in today’s CSR. We will be undertaking more comprehensive analysis of their impacts over the next few  hours and days. But for now the key point is that despite new increases in the value of Child Tax Credit (worth £30 a year in 2011/12 and £50 a year in 2012/13 – at total cost to the Treasury of £560 million by 2014/15) there have been cuts worth £1.4 billion in Tax Credit payments for families more widely.

These include a 10% cut in the childcare costs that working families can expect be covered by Tax Credits, a freeze in the annual value of several Tax Credit elements and a requirement that couple households with children are engaged in 24 hours or work (compared to the current 16) before qualifying for Working Tax Credits (and consequently any childcare support at all) at all.

Update: Budget 2006 increased the proportion of childcare costs that Tax Credits could meet from 70% to 80%. Today’s CSR has reversed that move. This means that families with weekly childcare costs of £300 (the maximum payable for a low-income family with 2 children) will lose £30 a week. The CSR’s equalities impact assessment states that “The reduction in support through the childcare element of tax credits…will particularly affect women in lone parent households. “

29 Responses to CSR 2010: Tax Credit cuts

  1. Nicola Smith

    Oct 28th 2010, 10:05 am

    Diane, the new hours rules will only affect couples currently working 16 hours between them, who will be required to work 24 hours between them. Although you will see a drop in the value of your award (because of other changes that are outlined above on this blog) your award will not depend on you moving into work.


  2. Three ways these welfare reforms hit the poorest in society | Liberal Conspiracy
    Oct 28th 2010, 1:31 pm

    [...] This will cost a low paid worker with two children up to £30 per week, or rather more than three times as much as the maximum impact of the abolition of the 10p tax rate (which was up to £4.46 per week). [...]

  3. Turab
    Oct 30th 2010, 4:17 am

    Hi, please advise I am working 18.5 hours a week and my wife not working, would we need to work 5.5 hours more to qualify for tax xredits? also if I increase my hours to 24 hrs will my tax credits go down as I am working more hours and obviously getting more money? also will my wife need to work providing I work 24 hrs?

  4. Simplification, sanctions and cuts won’t create jobs | Left Foot Forward
    Nov 11th 2010, 3:54 pm

    [...] given that wider Government policy is to cut spending on childcare, forcing people to re-locate to poorer areas (where there are fewer jobs) and cutting spending on [...]