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Annie Hayes



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Prudent Chancellor turns ‘family friendly’ with CTC


Vowing to give ‘Every child the best possible chance in life’ Brown produced some sugar-coated offerings in the form of Child Tax Credits and Child Benefits.

As announced in December’s Pre-Budget Report, from 6 April 2005, the child element of Child Tax Credit will be increased by £65 per year to £1,690 per year, in line with average earnings.

Credits for disabled children will also receive an inflation-linked hike as will Working Tax Credits and Guardian’s Allowance.

The limits on eligible childcare costs in Working Tax Credit will rise per week for families with one child and £300 per week for those with two or more children from April 2005; the maximum share of eligible costs covered will be 70% in 2005-06, rising to 80% in 2006-07.

The Chancellor referred to tax credits as: “The best way to help low and middle income Britain.”

According to the figures:

  • as a result of tax credits, a single earner two child family on half male mean earnings receives a net tax payment of £2,200 a year in 2005-06. This means their net tax rate in 2004-05 was minus 15%, compared to 4% in 1977-78 when Child Benefit was introduced and 9% in 1997-98

No further plans to extend maternity leave beyond the six to nine months by April 2007 with the view to a full year in the next Parliament were announced.

In response to the Chancellor’s statement that the child tax credits will rise 13% over the next three years, Bill Kirwan, PWC partner employment services commented, “Increasing child tax credits focuses reductions in tax for middle and lower income families. A positive move.”

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Annie Hayes


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