How the Autumn Statement may affect you
How might you be impacted by the Autumn Statement?
This Wednesday the Chancellor will make his Autumn Statement to the House of Commons in what will be our first glimpse of the measures being introduced to soften the planned reduction in tax credits.
What’s happening to tax credits?
The proposed reduction in tax credits, currently scheduled to take effect in April 2016, has become a political sore point for the government as it seeks to counter claims that it is hitting hard-working people. There will be added pressure on the Chancellor to ease the impact on those with low incomes with the release this week of research by Turn2us showing that half of low income working households are struggling to afford to heat their homes, with a third of those skipping meals as a result.
The changes would mean a rise in the rate at which Working Tax Credit is withdrawn and a decrease in the upper limit at which it is taken away entirely. In addition, the Chancellor announced further cost saving measures such as limiting the number of children eligible for Child Tax Credit to two and reducing the income threshold for those only claiming Child Tax Credits from £16,105 to £12,125.
How is this going to impact my income?
Alongside this, the National Minimum Wage is to be replaced by a 'National Living Wage' set at £7.20 in April 2016 and rising to at least £9 by 2020. Whilst many will benefit from the changes, as well as an increase in the income tax threshold, the Institute for Fiscal Studies say that only 13% of tax credit recipients will be better off as a result.
Why is the Chancellor changing the proposals?
Earlier in the year, the House of Lords blocked the tax credit changes in an unprecedented move, including a proposal to delay the plans for several years. The Chancellor has since said that he will listen to the concerns raised and come up with a fresh set of proposals, to be announced this Wednesday during his annual Autumn Statement.
What can we expect him to announce?
With tax credits becoming an increasingly toxic subject for the government it is likely that the Chancellor will attempt to find savings elsewhere. The big questions will of course be, where will the cuts come? Many initially suggested that Universal Credit may take the strain however this now seems unlikely after reports that Iain Duncan Smith, Secretary of State for the Department of Work and Pensions, threatened to resign over the matter. It was suggested that the rate Universal Credit is withdrawn could be increased to 75p for every additional pound earned, it currently stands at 65p.
Another area more recently thought to be targeted is Housing Benefit, one suggestion being that Housing Benefit claimants could be asked to pay the first 10% of their rent themselves.
The Institute for Public Policy Research claims that if the Chancellor plans to make all Housing Benefit claimants pay the first 10% of their rent themselves he will save £2.4bn, however the IPPR suggest he will be negatively impacting 4.8 million households with an average loss of £570 a year for households in the private rented sector. Social housing tenants would also lose £460 a year, according to the research.
How will I know if I am affected?
Turn2us will be giving live coverage of the Autumn statement on Twitter as well as providing analysis, comment and support on the day. If you are currently struggling or looking to find out what support you might be entitled to, including tax credit and Universal Credit entitlement, you can do so using the Turn2us Benefits Calculator.
Turn2us is currently running its No Cold Homes campaign to provide support to those struggling to afford to heat their homes. You can find more information about the campaign on our No Cold Homes campaign section.