How families will lose £1,250 a year

Tax and benefit blows, plus some gains, which the Family & Parenting Institute and IFS say will result in families with children suffering a £1,250 annual loss by 2015.

The key tax and benefit measures affecting families with children that have already been implemented are as follows:

*The income tax personal allowance increased by £1,000 in cash terms for the 2011–12 tax year;
*Increases in all National Insurance rates and increases in the thresholds at which employees’ and employers’ National Insurance start to be paid;
*An increase in the standard rate of VAT to 20%;
*Cuts to tax credits; in particular a three-year freeze in the basic and 30-hour elements of the Working Tax Credit, an increase in the rate at which tax credits are withdrawn as income rises, the abolition of the baby element of the Child Tax Credit and the withdrawal of the family element of the Child Tax Credit from £40,000 rather than £50,000. These are partly offset by an increase in the child element of the Child Tax Credit;
*Reductions in the maximum amounts of rent that can be claimed in Local Housing Allowance;
*A three-year freeze in Child Benefit rates;
*and The use of the Consumer Prices Index (CPI) to index benefit amounts each year rather than the Retail Price Index (RPI) or Rossi index.

Those to be introduced in 2012–13 include:

*A further increase in the income tax personal allowance above normal indexation;
*Reductions in contracted-out rebates in National Insurance;
*A further lowering of the point at which the family element of the Child Tax Credit starts to be withdrawn
*An increase in the number of hours couples with children need to work to be eligible for the Working Tax Credit from 16 to 24;
*Changes to the way in which tax credit awards are recalculated when a family’s income changes during the year which make the system less generous to such families;
*The withdrawal of child benefit from families containing a higher-rate taxpayer from January 2013;
and Time-limiting contributory Employment and Support Allowance for those in the Work-Related Activity Group.

The tax and benefit changes to be introduced in 2013–14 or 2014–15 that affect families with children include:

*The localisation of Council Tax Benefit accompanied by a 10% fall in expenditure.
*A medical reassessment of Disability Living Allowance claimants that is forecast to reduce the caseload by 20%.
*existing claimants of benefits and tax credits will start to be transferred to Universal Credit from April 2014.

Brother can you lend a dime?

CREDIT CRUNCH FORCES FAMILY MEMBERS TO LEND TO EACH OTHER

Parents, grandparents, brothers and sisters are asking each other for money more frequently, as household budgets come under pressure in the wake of the credit crunch, rising prices and job losses.

This form of lending is notoriously hard to measure. But 63% of a sample of 2,000 adults reported an increase in family members approaching relatives for money as a direct result of the credit crunch.

15% of family members are lending to each other on a regular basis, with the average loan running at £2,300 across the UK. Often the sum is more than they owe on credit cards.

The research, from insurance group Aviva, identifies parents aged between 40 and 60 years of age coming under particular pressure to lend, either to children who are short of funds or to grandparents who have retired and are hard put to find affordable borrowing.