From April 2011, Child Benefit will be frozen for 3 years. The money saved by this measure is to be spent in increasing Child Tax Credit at a rate above the Consumer Prices Index. The government believes that this will benefit lower-income families as Child Tax Credit eligibility is linked to household income.
In addition to freezing Child Benefit, the second income threshold (the level of income above which the family element of Child Tax Credit is reduced) will be reduced from £50,000 to £40,000. The net effect of these measures, along with other changes to Child Tax Credits, is that middle and higher income families will receive less financial assistance from the state to support their families.
No major changes are to take place to Working Tax Credit. The two notable changes are that from April 2012, the 50 plus element will be removed and that people over the age 60 will only have to work 16 hours as opposed to 30 hours to qualify for Working Tax Credit.
For more information, please see the June 2010 Budget.
Alex Hunt