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Tax credit changes will cause financial misery for working families

Marriage and Family
5 October 2015
Benefit 0

Changes to tax credits will cause financial misery for working families according to one of the UK’s largest Christian charities.

CARE, a prominent campaigner for recognition of marriage and family responsibilities in the tax system said under the Chancellor’s proposed changes from April 2016, three million working families will lose on average £1,400 a year.

Many families affected will not even have enough income to provide a minimum acceptable standard of living (as defined by the Joseph Rowntree Foundation).

Meanwhile a family with two children and earning £25,000 per annum will be unlikely to have enough money to meet even the bare essentials.

And many families will also be hit with an eye-watering 80 per cent marginal tax rate, meaning only 20pence from every new pound earned will be kept.

A new report, produced by CARE’s fiscal policy consultants has been published on the charity’s website outlining the consequences of the Chancellor’s tax credit plans.

CARE CEO Nola Leach said:

“Increasingly prominent voices are raising very real and genuine concerns about the Chancellor’s tax credit plans.

"Three million working families face considerable financial misery from April 2016 as a direct result of the proposed changes and it is quite wrong that the burden of reducing the deficit is placed on them.

“We already have a tax system where income tax takes no account of family responsibilities so at the very least, if tax credits are going to be phased out, tax reliefs should be phased in for families.

“The eye-watering marginal tax rate means it is going to be very hard for families to compensate for tax credit losses through extra work and they now face a black hole in their finances when these changes come into force.

“The Chancellor must think again and his upcoming Autumn Statement is a perfect opportunity to explain what he is going to do to compensate the three million working families across the UK who will lose out as a result of his tax credit reforms.”

Notes to Editors:

For more information and interview requests, please contact James Mildred on 0207 227 4731 / 07581153693 or email

Read CARE’s tax credit report, do so via the CARE website:

Following the Chancellor’s summer budget The Institute of Fiscal Studies (IFS) said three million working families will face, from April 2016 a marginal tax rate of 80 per cent:

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