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Tax credit changes 'the wrong move at the worst time'

19 Apr 2012

Citizens Advice Scotland have said new changes to tax credits will hit nearly 85,000 families in Scotland, making them much worse off. 

CAS spokesperson Jeanette Campbell says:

“These changes represent the wrong move at the worst time.

“In the CAB Service we see first-hand how many households are already struggling every day just to pay their bills and put food on the table. Tens of thousands of working Scottish families rely on tax credits. They need every penny they can get, and changes like these will be a real blow to them. 

“The changes have to be seen in the overall context of an ever-rising cost of living, against household incomes which are either frozen or falling. These two changes will adversely affect 85,000 low income households in Scotland and 119,000 children. It could push many people into poverty and debt. 

“20% of Scottish children are already living in poverty. These changes will make the situation even worse.

“Anyone who needs advice on money or benefits, budgeting or debt should contact their local CAB. Our advice and support is free, confidential and impartial.

“But the government must understand the real impact these policies are having on peoples’ lives. In the current economic climate, working parents are desperately trying to keep their head above water and provide for their children. They could do with more carrot and less stick.”

The Facts 

  • From tomorrow, the eligibility rules will change for two tax credits: Working Tax Credit and Child Tax Credit.
  • Currently families are eligible for Child Tax Credits if their income is below £41,300. However, tomorrow this will change to £26,000 for lone parents and £32,000 for families with two children. 
  • If you’re responsible for at least one child and work at least 16 hours a week, you can also currently claim Working Tax Credit. At the same time, the amount that can be received for childcare costs is being cut from 80% to 70%, meaning that families have to meet nearly one third of such costs themselves.
  • In addition, there is an increase in the number of hours couples with children have to work to be even eligible for Working Tax Credit: it goes up from the current 16 hours per week to 24 hours per week (with one parent having to work at least 16 hours). In the current economic climate, people will not find it easy to increase their hours or get another job with increased hours. And even if they do this will also increase their childcare costs.

The Figures

  • 11,370 Scottish families are set to lose Working Tax Credits, worth up to £3870 per year
  • 73,300 Scottish families are set to lose Child Tax Credits, worth around £545 per year.
  • 119,000 children live in families which are set to lose Working Tax Credits or Child Tax Credits.
  • 20 per cent of all Scottish children currently live in poverty.
  • In 13 Scottish Council areas, 30 per cent of children already live in poverty.
  • 8.7 per cent of Scots were unemployed in the three months leading up to the end of Jan 2012.
  • £26,244 was the average UK full-time salary in 2011

ENDS