Anita Brook is founder of Accounts Assist a growing firm of Chartered Accountants. She’s been advising small business, sole traders and consultants for 12 years.
Cuts in credits for working mums
Changes and reductions to the benefits parents receive may seem like a punishment to some of the hardest working people in the UK – holding down a job and looking after children is no mean feat.
Some of us will be worse off than others, and in fairness, wealthier families may not have needed the extra cash provided by the last Government.
Here’s a low down of how these changes might affect you:
Tax credit threshold
Tax credits are made up of various elements paid at different rates; including the family, baby, child, young person and disability elements.
Families with an income of more than £40,000 will see their eligibility for child tax credits reduced from April 2011. The threshold was previously £50,000.
In addition to the reduction in child tax credits, the baby element will be abolished from the beginning of next year. This is currently paid to families with infants under the age of one, up until their first birthday.
These changes will cause the most pain for people with more than one child. According to single-parent organisation Gingerbread, families with two or more children could be over £1,200 worse off a year.
There is some light at the end of the tunnel – the chancellor also announced that the child element of the tax credit will increase by £150 above inflation from next April, and in April 2010, by £60 above indexation. This element is paid for all children.
If you are eligible for tax credits of any sort make sure you get your application to the HMRC by the July 31st deadline.
Maternity grants
The health in pregnancy grant of £190 has been abolished. This was previously given to every mother in the UK after 25 weeks of pregnancy and was intended for buying good food to ensure the health of mother and baby. This seems to me to be a fairly sensible cut as many women who received the money didn’t need this extra cash and there was no control in how it was actually spent. Means testing pregnancy grants and providing vouchers only redeemable on healthy food may have provided a compromise.
The Sure Start maternity grant of £500 is still in place, but only for the first child. To be eligible to receive this, you or your partner must be on Jobseeker’s, Employment or Support Allowance; Pension Credit, receiving Child Tax Credit at a higher rate than the family element or eligible for Working Tax Credits based on disability.
The Government has tried to off-set these cuts by increasing the personal allowance rate by £1,000, Citizens Advice fear that this may have little impact on the poorest young families in rented accommodation, who also receive Council tax and housing benefit. These benefits are means tested, so any rise in take-home pay will result in a loss of entitlement.
Child benefit
Child benefit, which is not means tested, will be frozen at its current level of £20.30 a week for the eldest child and £13.40 for each additional charge, for the next three years.
Some of these cuts are necessary, taking money away from groups that don’t really need it. Unfortunately, it seems that the casualties may be the UK’s poorest families.
For more information about tax credits and what you might be entitled to, visit http://www.hmrc.gov.uk/TAXCREDITS/.
Tags: child benefit, maternity, pregnancy, tax credits, workimg mums
This post has been commented once
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January 15th, 2011 at 11:05 pmPatrick Denver says:
The cuts in credits, is a little sad, but shouldn’t come as a surprise considering the economy