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Nothing more to say: This Tax Credits advert was intended to warn people to keep up-to-date with information they send HMRC about their Tax Credits claim; now it seems the message is much simpler - they want to stop paying you anyway.

Nothing more to say: This Tax Credits advert was intended to warn people to keep up-to-date with information they send HMRC about their Tax Credits claim; now it seems the message is much simpler – they want to stop paying you anyway.


Families whose combined household earnings total as little as £3,850 would lose tax credits under George Osborne’s plan to cut the amount available in the future.

Analysis from the Commons Work and Pensions select committee provided the shocking figures, which contradict Osborne’s – and the Conservative Government’s – claims that they are “making work pay” for people on lower incomes.

The report has warned that only about one-third of those affected by the tax credit cuts would benefit from the increase in the minimum wage – misnamed the National Living Wage by the Tories, even though it won’t provide enough money for people to survive without claiming benefits – even by the time of its full implementation in 2020-21.

A single earner with 2 children working 35 hours would increase their net income by £323 pounds a year under the ‘National Living Wage’, but will lose £1,701 in tax credit cuts, leaving the family £1,378 worse off overall.

By 2020-21, 78 per cent of affected families would be on average £1,500 worse off in real terms as a consequence of the proposed cuts, the personal allowance increases and the National Living Wage combined.

All of the above means that increases in the income tax personal allowance and the National Living Wage “should not be confused with compensation for tax credit cuts.”

The increased taper rate of 48 per cent under the tax credit cuts combined with income tax, national insurance (NI) and implications for housing benefit mean that many individuals would keep just 7p of every additional £1 in earnings – a marginal deduction tax rate of 93 per cent.

This runs directly against the Conservative Government’s stated objective of making work pay, and makes a mockery of Tory ministers’ claims that a 50 per cent income tax rate for people on the highest incomes is too much; the super-rich would be paying slightly more than half as much tax as the poorest earners.

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