Thresholds and Taper
The Chancellor announced in the Autumn Statement 2015 that the Government would no longer be making cuts to the thresholds for Working Tax Credit and Child Tax Credit and the taper used will remain at 41% instead of increasing to 48%.
This will mean if your income is above £6,420 a year (for CTC only £16,105 pa) your maximum tax credit entitlement will be reduced by 41p for every £1 your income is above the threshold.
Cut to the income rise disregard from April 2016
The income rise disregard is to be reduced to £2,500 from April 2016. At present if claimants have an increase in income of less than £5,000 in a tax year, this increase is disregarded and will not lead to a Tax Credit overpayment. Decreasing this disregard to £2,500 will lead to decreases in entitlement and increasing numbers of overpayments of Tax Credits.
Cut to Family Element from April 2017
From April 2017 the Family Element part of Child Tax Credit (£545 a year) will no longer be awarded to CTC claimants following the birth of their first child. Families claiming CTC for the first time after April 2017 will also not be awarded the Family Element. Families who were receiving CTC prior to a new claim and the break in the claim is less than 6 months will still be entitled to the Family Element.
Cuts to Child Tax Credit for families with more than 2 children from April 2017
From 2017 families not be able to claim Child Tax Credit for a third or subsequent child born after April 2017. Protection will be given to:
- families who have been receiving CTC or UC with and have a breaks in in their claim of less than 6 months;
- families with children with disabilities will continue to receive the disabled child element and severe disabled child element of CTC or UC;
- children born as multiple births will be protected;
- a woman who has a third child as a result exceptional circumstances.
Changes to Pension Credit from April 2016
The DWP has published legislation to make two key changes to Pension Credit from April 2016.
Phasing out of Savings Credit
From April 2016 Savings Credit will no longer be paid to new claimants in mixed aged couples where one of the couple is above Pension Credit age and the other is below.
Phasing out of Assessed Income Periods
Pension Credit claimants over the age of 65 currently have an assessed income period applied to their claim of up to 5 years, and those over 75 have an indefinite assessed income period during which they do not have to report any changes in their retirement provision such as increases in pension or increases in capital.
From April 2016 new claimants will no longer have an assessed income period applied to their claim. Assessed income periods which are due to end between April 2016 and March 2019 will be allowed to run their course. Assessed income periods due to end after April 2019 will end before March 2019. This does not affect those claims with indefinite assessed income periods.