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.