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Tax cuts deliver extra help for families

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Issued 06 April 2009

The Government is today implementing tax cuts and increasing benefits to provide help for families and individuals in dealing with the effects of the global economic downturn.  A number of important changes for families and individuals will come into effect with the start of the new tax year today.

The changes include:

  • increased personal tax allowances, which will benefit 22 million basic rate taxpayers;
  • increased child tax credits and working tax credits, benefiting over 4 million families; 
  • increases in the Basic State Pension for 12 million pensioners, and Pension Credit increases that benefit over 2 million pensioner households;
  • a new £190 grant for mums-to-be payable at the 25th week of pregnancy;
  • and since 5th January, over 7 million families have been benefiting from the increase in Child Benefit that was brought forward from April.

Chancellor of The Exchequer, Alistair Darling, said:

"We are determined to support families and businesses.  The increases in child benefit, tax credits and pensions will provide extra help for millions of households across the country at a time when they need it most.”

Personal tax allowance increase

To provide additional help for low to middle income families the Government has increased the personal allowance by £130 above indexation for 2009-10. This is on top of the £600 increase announced in May for 2008-09, which has now been made permanent. Together the changes mean that 22 million basic rate taxpayers under 65 will pay £145 less tax in real terms in 2009-10.

Tax Credit increases

The Government remains firmly committed to eradicating child poverty and will continue to build upon the substantial progress made since 1997. The 2008 Pre-Budget Report set out further steps to reduce child poverty including changes to the Child Tax Credit and Working Tax Credit and bringing forward its commitment to increase the child element of the child tax credit by £25 above indexation in April 2010 to April 2009. The child element of Child Tax Credit has therefore been increased by £150 in total to £2,235, helping 3.9 million families. In addition 7.5 million families are already befitting from the over indexation increase in child benefit for the first child which now stands at £20 per week. The Government brought forward the increase from April to January to provide real support for families during these difficult times.

Support for Pensioners

The Government has increased the basic State Pension by 5%, in line with prices, with the level of a basic full State Pension rising from £90.70 to £95.25 a week; this will benefit 12million pensioners. The Government also confirms an above-indexation increase of 4.8% in Pension Credit’s minimum income guarantee from £124.05 to £130.00 for single pensioners and from £189.35 to £198.45 for couples in 2009-10, which will support 2.1 million pensioner households.

Health in Pregnancy Grant

The Health in Pregnancy Grant is a brand new £190 grant for all pregnant women, available from their 25th week of pregnancy.  The grant is tax-free and disregarded for the purpose of income-related benefits.  This will help 780,000 women to invest in their individual needs during pregnancy, whilst giving them flexibility to choose how they budget and where they spend this money.

Help for Job seekers

A 6.3% in income support, job seekers allowance, employment and support allowance, and incapacity benefit, significantly above inflation, and will be of real benefit to individuals and families across the UK

Notes

  1. The detail of the changes being implemented today on income tax allowances, tax credits and other rates for 2009-10 were set out in press notice 2 alongside the 2008 Pre Budget Report.
  2. The Health in Pregnancy grant is being launched on Monday April 6th 2009 – for more details on this please contact HMRC press office on: 020 7147 0000 or visit the HMRC website .
  3. For Further information on the changes to pensions please visit the DWP website .

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Article Published/Sorted/Amended on Scopulus 2009-04-07 12:06:18 in Tax Articles

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