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Families warned of tax credit bombshell

Families with children stand to lose £511 a year on average under tax and benefit changes coming into force from tomorrow, an analysis by a respected think tank showed.

Anti-poverty campaigners dubbed the start of the financial year Bad Friday, warning cuts totalling more than £2 billion were taking effect over the Easter weekend.

Shadow chancellor Ed Balls said the impact calculated by the Institute for Fiscal Studies was proof of a "tax credits bombshell" with up to a million households losing eligibility entirely.

As political sniping continued over the effects of last month's Budget, the Treasury retorted by claiming the average household would be £5.50 a week better off.

More than 15 times as many would see an improvement to their finances than would be worse-off thanks to an increase in income tax allowances, Economic Secretary Chloe Smith said.

Labour pointed to Government figures suggesting more than 850,000 families stood to lose their child tax credit - worth around £545 per year - from the start of the financial year.

Another 212,000 couples on less than £17,000 a year would lose working tax credit unless they were able to increase their hours of employment, the opposition said.

A minimum-wage earning couple with two children would end up better off quitting work altogether unless they could do at least 19 hours per week between them.

Copyright Press Association 2012

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