Best of the Week
Most Popular
1.US Paving the Way for Massive First Strike on North Korea Nuclear and Missile Infrastructure - Nadeem_Walayat
2.Trump Reset: US War With China, North Korea Nuclear Flashpoint - Video - Nadeem_Walayat
3.Silver Junior Mining Stocks 2017 Q2 Fundamentals - Zeal_LLC
4.Soaring Inflation Plunges UK Economy Into Stagflation, Triggers Government Pay Cap Panic! - Nadeem_Walayat
5.The Bitcoin Blueprint To Your Financial Freedom - Sean Keyes
6.North Korea 'Begging for War', 'Enough is Enough', is a US Nuclear Strike Imminent? - Nadeem_Walayat
7.Bitcoin Hits All-Time High and Smashes Through $5,000 As Gold Shows Continued Strength - Jeff_Berwick
8.2017 is NOT "Just Another Year" for the Stock Market: Here's Why - EWI
9.Gold : The Anatomy of the Bottoming Process - Rambus_Chartology
10.Bitcoin Falls 20% as Mobius and Chinese Regulators Warn - GoldCore
Last 7 days
BREAKING NEWS - United States Galloping Towards Nuclear War with China Proxy North Korea - 26th Sep 17
Here’s Why Turkey Can’t Stay Out Of Syria - 25th Sep 17
Hidden Gems Shows A Foreboding Stock Market Future - 25th Sep 17
10 Reason You Should Use Ridesharing To Save Money - 25th Sep 17
Commodities King Gartman Says Gold Soon Reach $1,400 As Drums of War Grow Louder - 25th Sep 17
Stock Market Mixed Expectations, Will Stocks Continue Higher? - 25th Sep 17
22 charts and 52 questions that will make you Buy Gold - 25th Sep 17
Speculation Favors Overall Higher Silver Prices - 25th Sep 17
The Advertising Breakthrough Revolutionizing Gaming - 25th Sep 17
Stock Market Forming a Reluctant Top - 25th Sep 17
Grid Forex Strategy - All You Need to Know - 25th Sep 17
Catalonia, Kurdistan, Patriotism, Flags and Referendums - 24th Sep 17
Two Key Indicators Show the S&P 500 Becoming the New ‘Cash’ - 24th Sep 17
The Felling of Sheffield's Big Street Trees 2017 - Dobcroft Road - 24th Sep 17
Advantages of Forex Trading - 24th Sep 17
Stocks, Gold, Dollar, Bitcoin Markets Analysis - 23rd Sep 17
How Will We Be Affected by a Series of Rate Hikes? - 23rd Sep 17
Fed Quantitative Tightening Impact on Stocks and Gold - 22nd Sep 17
Bitcoin & Blockchain: All Hype or Part of a Financial Revolution? - 22nd Sep 17
Pensions and Debt Time Bomb In UK: £1 Trillion Crisis Looms - 22nd Sep 17
Will North Korea Boost Gold Prices? Part I - 22nd Sep 17
USDJPY Leads the way for a Resurgent Greenback - 22nd Sep 17
Day Trading Guide for Dummies - 22nd Sep 17
Short-Term Uncertainty, As Stocks Fluctuate Along Record Highs - 21st Sep 17
4 Reasons Gold is Starting to Look Attractive as Cryptocurrencies Falter - 21st Sep 17
Should Liners Invest in Shipping Software Solutions and Benefits of Using Packaged Shipping Software - 21st Sep 17
The 5 Biggest Bubbles In Markets Today - 20th Sep 17
Infographic: The Everything Bubble Is Ready to Pop - 20th Sep 17
Americans Don’t Grasp The Magnitude Of The Looming Pension Tsunami That May Hit Us Within 10 Years - 20th Sep 17
Stock Market Waiting Game... - 20th Sep 17
Precious Metals Sector is on Major Buy Signal - 20th Sep 17
US Equities Destined For Negative Returns In The Next 7 Years - 3 Assets To Invest In Instead - 20th Sep 17
Looking For the Next Big Stock? Look at Design - 20th Sep 17
Self Employed? Understanding Business Insurance - 19th Sep 17
Stock Market Bubble Fortunes - 19th Sep 17
USD/CHF – Verification of Breakout or Further Declines? - 19th Sep 17
Blockchain Tech: Don't Say You Didn't Know - 19th Sep 17
The Fed’s 2% Inflation Target Is Pointless - 19th Sep 17
How To Resolve the Korean Conundrum  - 19th Sep 17
A World Doomed to a Never Ending War - 19th Sep 17
What is Backtesting? And Why You Need Backtesting System? - 19th Sep 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

Working Child Tax Credit Cuts Average £2k per Household From 2016-17

Personal_Finance / UK Tax & Budget Jul 09, 2015 - 04:01 AM GMT

By: Nadeem_Walayat

Personal_Finance

As expected the Chancellor George Osborne took a hatchet to the Labour legacy Working and Child Tax Credits system that had mushroomed from an initial budget of £2 billion a year to £30 billion today, succeeding in creating a pool of some 4 million vested interest families and acting as a huge inducement for a 15 year long mass immigration trend into Britain which remains out of control as illustrated by the most recent immigration statistics (+318k).


The cuts will ultimately amount to slicing £9 billion from the current tax credits £30 billion bill. However this reduction in what amounts to a subsidy to employers will be phased in over the next 4 years as detailed below:

Income Threshold for tax credits Reduced

This is where the real big cuts will come for most households from April 2016 onwards. The income threshold below which households receive the maximum amount of benefits will be reduced from £6,420 to £3,850. What this means is that for ever £1 a household earns over £3,850 will be reduced by 41p. However the rate of reduction INCREASES to 48p. Which therefore implies a tax credits cut of upto £1,233 per household. Furthermore the jump from 41p to 48p amounts to a 7% benefits cut on payments ABOVE the previous threshold of £6420 i.e.

Tax credit cut of 48p per £1 earned on the first £2,570 (£6,420 - £3,850) = £1233.

Tax credit cut of 7p per £1 earned above £6,420.

Household Income Examples -

£16k income - Cut = £1233+£670 = £1,903

£18k income - Cut = £1233+£810 = £2,043

£20k income - Cut = £1233+£950 = £2,183

£24k income - Cut = £1233+£1230 = £2,463

And ironically this will primaily hit those IN WORK rather than OUT OF WORK due to to much lower earnings where the shortfall is made up by other out of work benefits which do not count against the threshold. Therefore on face value the change is an incentive for families on low paid NOT to work.

Limited to 2 Children

As of April 2017 new child tax credit application awards will be limited to the first 2 children only. Whilst this does not apply to current or future claims upto April 2017, however it will apply if there is a break in tax credit claims of greater than 6 months. The 2 child limit will also apply to housing benefit.

Tax Credits Freeze

A string of benefits including tax credits will be frozen for 4 years from April 2016 allowing inflation to erode the real terms value by an estimated 10% of the current value of the benefits.

Benefits Cap Cut

Household maximum benefits will be cut in London to £23k and to £20k outside London, which includes tax credits.

What does this mean ?

Typical households in receipt of tax credits with 2 or more children should typically budget for at least a £2k reduction in their tax credit awards for 2016-17, and that is BEFORE the impact of inflation. So low paid families are going to feel the pain as most could experience a 10% drop in total household incomes with further cuts to come in subsequent years as a consequence of the benefits freeze.

Ensure you are subscribed to my always free newsletter for ongoing in-depth analysis and detailed trend forecasts that include the following planned newsletters -

  • Why Thousands of Muslims Are Going to Live, Fight and Die in Syria / Iraq
  • US Dollar Trend Forecast Update 2015
  • Gold Price Forecast Second Half 2015

Also subscribe to our Youtube channel for notification of special video projects such as -

  • The Illusion of Democracy and Freedom
  • Did God Create the Universe?

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2015 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife