Low-income households are among the big losers from the budget as a dramatic raft of changes to tax credits and benefits, barely mentioned in George Osborne's speech, come into force in April 2013. .
The government's own analysis reveals that in the next tax year the bottom 10% of households by income will be £200 worse off, compared with 2010-11.
Tax credits Key elements of tax credits will not rise at all in the coming tax year, including the basic element of the working tax credit (WTC), which stays at £1,920, and the family element of the child tax credit (CTC), stuck at £545.
From 6 April, the child element of CTC rises by £30 a year (57p a week) to £2,720, and the disabled child element goes up by £65 to £3,015 a year. Most key benefits and tax credits will rise by just 1% a year – below projected inflation and a 4% real terms cut.
The current tax credit calculation is complicated. The total a claimant is eligible for is reduced by 41p for every £1 earned over £6,420 – also frozen for the coming tax year. The government online calculator at gov.uk/tax-credits-calculatorgives an idea of what claimants qualify for.
The benefits cap There will be a £26,000 cap on the total amount of benefits that working-age people in the UK can receive (including jobseeker's allowance, housing benefit, child benefit and carer's allowance), limiting it to £500 a week for families, or £350 for childless single-adult households. It will be introduced in April across four London boroughs, then rolled out by the end of September.
The benefit cap will not affect you if you, your partner or any children that you are responsible for, qualify for a number of benefits, such as disability living allowance. The government has a benefits cap calculator at gov.uk/benefit-cap.
The "bedroom tax" If you're 16 to 64 and on housing benefit, from April this will cut the amount paid by 14% if you have a spare bedroom, or 25% if you have two spare bedrooms. Children under 16 of the same gender are expected to share, while children under 10 are expected to share regardless of gender.
Council tax benefitIt will end from 1 April, with local councils expected to deliver a replacement scheme for non-pensioner residents on a low income. While pensioners are protected, in general the most anyone of working age will receive is 85% of their council tax bill.
Casestudy: The bedroom tax
Last week Marie Burrows (pictured above) was told she would have to find an extra £78 a month out of her benefits or leave the two-bed flat in south London she has lived in for the past 20 years.
Marie, 59, suffers from fibromyalgia, which she says leaves her housebound and often in excruciating pain. When she first moved into the specially-adapted housing association flat, she shared it with her daughter, but now she lives alone.
Under the government's Welfare Reform Act, claimants who have a spare bedroom will from April lose 14% of their housing benefit, rising to 25% for two or more spare bedrooms.
"I only got the call last week telling me I am going to have to find an extra £78 every month. I asked the housing association if they had a one-bed flat I could move to, but they said there's nothing. This is going to have a huge impact on me. You don't get to the end of the month and have £80 left lying around. I don't have a choice. I'm going to have to cut back on either food or heating. I think it's disgusting."
Marie says she receives employment and support allowance of £174.35 a week plus disability living allowance totalling £131.50 (adding the care and mobility components together), which is the equivalent of £1,325.35 a month. The rent on the flat is just over £520 a month, met by housing benefit. But from next month she'll have to pay £78 towards the rent or be forced to leave.
"This government is really demonising disabled people. But the number who are fiddling the system is tiny. Why, just because I can't earn a living, is my contribution to society regarded as zero? If this wasn't all so serious it would be a joke," says Marie., which assists people to access the money available to them – through welfare benefits, grants and other help.
Source: Guardian
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