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Budget June 2010 - Tax Credit Changes

Budget June 2010 - Tax Credit Changes
Wednesday, 23 June 2010 07:43

A whole series of changes are announced to the tax credits system. From April 2011:  

  • the second income threshold for the family element of the Child Tax Credit will reduce from £50,000 to £40,000 
  • the first and second withdrawal rates for tax credits will increase to 41%
  • the baby element will be removed from the Child Tax Credit and, from April 2012, the 50 plus element will be removed from the Working Tax Credit  
  • the level of in-year rises of income that will be disregarded from calculations of tax credit entitlement will decrease from £25,000 to £10,000 and, from April 2013, this will be reduced to £5,000. 

In April 2011, the child element of the Child Tax Credit will increase by £150 above indexation and, in April 2012, it will increase by £60 above indexation.

From April 2012:  

  • the period for which a tax credit claim and certain changes of circumstances can be backdated will be reduced from three months to one month
  • a disregard of £2,500 will be introduced in the tax credits system for in-year falls in income.

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