29 November 2011
Autumn statement brings more bad news for some tax credit claimants
Today the Chancellor gave his Autumn Statement which included some tax credit announcements.
The changes announced from April 2012 are:
- Up-rating of the child element of CTC and the disability elements of tax credits by Consumer Prices Index (5.2%)
- A freeze on the second adult element (couple/lone parent element) of WTC
- The removal of the previously announced £110 above indexation increase for CTC child element.
These changes are in addition to those already announced and outlined in our future changes section. Over the coming week we will update that section to include these new changes.
The freeze on the second adult element of WTC means that the CTC threshold will also be frozen at £15,860 from April 2012. This is because the CTC threshold is set by calculating the income point at which the basic and second adult elements of WTC are tapered away. 2011-2012 was the first year that the CTC threshold fell since the introduction of tax credits. This was due to the freeze on the basic element of WTC and the increase in taper from 39% to 41%. We had expected to see it rise again from April 2012 prior to today’s announcement.
The official documents are available on the Treasury website.
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