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The news has been dominated by the government’s announcements regarding heavy cuts to housing benefit and child benefit for higher rate tax payers. The plan has been set out to raise an estimated £6.2bn over a period of four years. However, it has been revealed that it will actually be the changes in tax credits which are going to hit those on modest to low incomes. This group consists of those households which earn between £12,000 and £30,000 per year. Changes to tax credits will also be the measure which will save more money housing benefit and child benefit cuts.

Middle income earners make up a third of all working-age households and these are the people who will experience more negative effects than positive. They are the most susceptible to stagnant wages, and most affected by inflation, increases in VAT, fares, tuition fees and changes to pensions.

The coalition government is expected to try and solve this problem by allowing people the chance to earn more money before they are required to begin paying tax.