What's next for tax credits?
Major changes were introduced to the tax credits system from April 2011 and April 2012. One further change to the disregard for increases in income is expected in April 2013. We have prepared a table below which summarises the recent changes and notes any further planned changes.
| 6 April 2011 | 6 April 2012 | 6 April 2013 |
| Changes to the £50,000 threshold | £50,000 second income threshold lowered to £40,000. | Family element withdrawn immediately after the child element. | |
| Changes to the taper rates | 39% withdrawal rate increases to 41% 6.67% withdrawal rate increases to 41% | | |
| Changes to the elements of tax credits | Baby element withdrawn. Those aged 60 and over can qualify for WTC by working at least 16 hours a week. CTC child element to be increased by £180 above indexation. 80% help with childcare costs reduced to 70% | 50+ element withdrawn. | |
| Changes to backdating | | Backdating will be reduced to one month for initial claims and changes of circumstances which increase an award. | |
| Changes to the income disregards | Income disregard (for increases in income) to be reduced from £25,000 to £10,000. | Income disregard of £2,500 (for decreases in income) to be introduced. | Income disregard (for increases in income) to be reduced from £10,000 to £5,000. |
| Changes to uprating | The Consumer Price Index (CPI) will be used to uprate all of those elements of tax credits previously uprated by Retail Price Index. The basic and 30 hour elements of WTC will be frozen for 3 years | Continued freeze of the basic and 30 hour elements of WTC Second adult element of WTC frozen. | Continued freeze of the basic and 30 hour elements of WTC |
| Changes to the WTC qualification criteria | | Couples with children will be required to work at least 24 hours per week to qualify for WTC (with at least one person working at least 16 hours per week). | |
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