Tax credits ‘will leave families £3,000 worse off’

The recent tax credit changes will leave families £3,000 worse off than they would have been last year, according to new findings from the Trades Union Congress (TUC).

A tax credit calculator has been launched by the TUC, which helps working parents who receive tax credits estimate how the changes will impact their finances.

Many will be in for a shock once they realise how much they will lose by 2015-16, according to the TUC.

A dual earning family which earns a combined total of £40,000, with two children, paying £300 a week in childcare for 45 weeks of the year, could stand to lose over £3,000 a year by 2015-16, according to the tax credit calculator. This is a harrowing 30 per cent fall from their previous entitlements.

Single parents are set to find it harder too, with those earning £15,000 and working 20 hours a week, with two children – one in receipt of the higher rate care component of disability living allowance – and paying £150 a week in childcare for 40 weeks a year could lose £1,357 by 2015-16.

General secretary at the TUC Frances O'Grady said: "The government should be prioritising support for working families but seems more interested in coming up with new ways to squeeze their living standards."

The government recently revealed eligible working families will be given up to £1,200 a year for each child, up to a maximum of 20 per cent of their total childcare costs. However, the findings from the TUC seem to contradict this and could mean parents are financially worse off as a result.

Families who are already in debt may soon find it increasingly difficult to manage their finances if the figures from the TUC ring true. It is important for individuals to assess their finances now to make sure they are prepared for the changes that have been implemented.

By James Francis