Britain’s poorest hit by £2.5bn ‘stealth tax’

Britain’s poorest hit by £2.5bn ‘stealth tax’

Published on 12/01/2012

Tax cuts for low and middle-income families in April will be dwarfed by hidden reductions in tax credits, according to a study for The Independent.
The analysis found that the £1bn of tax cuts in April will be outweighed by reductions of more than £2.5bn in the complex tax-credit scheme.
Most of the cuts to credits, which top up the wages of low-income families in work, will take effect from April and could catch families unaware.
The Government’s flagship policy of raising income-tax thresholds has been trumpeted by the Liberal Democrats as their main achievement since the Coalition was formed last year – and a major boost for the low-paid.
But the Resolution Foundation think tank, which undertook the study, questions the fairness of the changes.
George Osborne, the Chancellor, increased the personal tax allowance from £6,475 last year to £7,475 in the current financial year, and it will rise to £8,105 in April. Nick Clegg hopes it will reach £10,000 by the next election to fulfil a key pledge in last year’s Liberal Democrat manifesto.

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