MIDDLE CLASS families are set to take a hit from reduced child benefits and tax credits as the government bids to support the lower income bracket.
In yesterday’s emergency Budget, chancellor George Osborne said the government will freeze child benefit and reduce eligibility for tax credits to families earning over £40,000.
The baby element of child tax credit, paid for children under one, is also set to be abolished.
Osborne said that the freezing child benefit would save the government almost £3bn by 2015 – funding significant increases in child tax credits targeted at those on low incomes. Osborne said that “unsustainable” spending on tax credits has increased from £18bn in 2003 to £30bn this year. “This is a tough decision, but I believe it strikes the right balance,” he added.
The child benefit 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.