The Impact of the Budget on Families

We felt that in view of the current economic climate, it would be useful for families to understand exactly how the emergency budget will effect them.  We hope you find this useful.

Child Benefit: The rates of Child Benefit for the first and subsequent children will be frozen for three years from April 2011.  The allowance is currently paid at a rate of £20.30 a week for the eldest child and £13.40 a week for each additional child.

·         Tax Credits: Child tax credits are made up of various different elements paid at different rates. These include the family element, the baby element, the child element, the young person element, and the disability element. From April 2011 families with a household income of more than £40,000 will see their eligibility for child tax credits reduced. The baby element of child tax credit will be abolished from the beginning of the next tax year.  This is paid, in addition to the family element, to each family that includes at least one eligible child under the age of one.  The baby element is paid up until the youngest child's first birthday.  The Chancellor also announced an increase the child element of the tax credit by £150 above inflation (as measured by the CPI) from next April, and in April 2012 by £60 above indexation.  The child element is paid for each child in a family.  The Coalition Government will not introduce the £4 supplement in the Child Tax Credit for each child aged one to two from April 2012, which was announced by the previous administration in the March 2010 Budget.  From April 2012, the period for which a tax credit claim and certain changes of circumstances can be backdated will be reduced  from three months to one month. 

·         Maternity payments: The health in pregnancy grant, a £190 payment to all pregnant women beyond their 25th week of pregnancy, will be abolished from April 2011.  The grant was introduced in April last year with an aim to make sure all mothers-to-be have funds available to help them eat well in the run-up to giving birth, so reducing infant mortality rates.
The government will also restrict eligibility to the Sure Start Maternity Grant to the first child only.  The grant is a one-off £500 payment for those on a low income to help towards the costs of a new baby.
 

·         Lone Parent Families:From October 2011, lone parents whose youngest child is aged 5 or above will be eligible for Jobseekers Allowance rather than Income Support.  Existing lone parent recipients of Income Support will be transferred from Income Support to Jobseekers Allowance from April 2012.

·         Employer- Supported Childcare: From April 2011, the weekly amount that parents joining an Employer-Supported Childcare scheme will be able to claim exempt of income tax and disregarded of National Insurance Contributions will remain at £55 for basic rate taxpayers, but will be reduced to £28 and £22 per week for higher and additional rate taxpayers respectively.  All current users will continue to enjoy the same exemption and disregards beyond April 2011.