Tax credit changes
A number of important changes to child and working tax credit came into effect on 6 April 2011.
These changes include:
- Reduced eligibility to child tax credit for families with household income above £40,000.
- Changes to some of the tax credit rates, this includes an increase to the maximum amount of the child element of the child tax credit to £2,555 (from £2,300).
- The baby element of the child tax credit has been removed.
- Reduction in the income disregard from £25,000 to £10,000.
- Withdrawal rates for tax credits have been increased to 41%. This change may affect the amount of tax credits for recipients whose income increases beyond the income thresholds and withdrawal rates.
- The amount of help available to help with childcare costs has dropped from 80% to 70% from 6 April 2011.
- From 6 April 2011 individuals aged 60 or over only need to work 16 hours or more to qualify for working tax credit.
Child Tax Credit is paid directly to the main carer in the family either weekly or monthly and is usually paid directly to a designated bank or building society account.
The Working Tax Credit assists taxpayers on low incomes by providing top-up payments. This credit is available to employees and the self-employed on low incomes whether they have children or not.