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Tax and benefit changes take effect in the UK on Friday.

M2 EQUITYBITES-April 5, 2012-Tax and benefit changes take effect in the UK on Friday(C)2012 M2 COMMUNICATIONS http://www.m2.com

Tax changes introduced by the UK Chancellor George Osborne will take effect on Friday and Shadow Chancellor Ed Balls claimed today that the changes will leave the average family worse off by GBP511 per year.

This figure comes from a recent report by the Institute for Fiscal Studies, which claims that any gains from an increase in the income tax threshold are outweighed by other changes.

The changes to tax, benefits and tax credits will come into force with the start of the new tax year.

Each taxpayer under 65 will see an increase in the amount of income that is tax free, with the threshold rising by GBP630 to GBP8,105. In addition a number of benefits will rise by 5.2%, including jobseeker's allowance, income support, inheritance tax allowance, disability benefits, maternity benefits, incapacity benefit and child benefit.

At the same time however most couples with children will have to work for at least 24 hours a week between them, instead of the previous 16, in order to qualify for working tax credit. Meanwhile the child element of child tax credits will increase by GBP135 but the couple and lone-parent elements of working tax credit are being frozen, the BBC reports.

According to Labour, the official opposition party, up to one million families are set to lose all of their child tax credit or working tax credit from tomorrow, with over 850,000 families losing all of their child tax credit, worth around [pound sign]545 per year, and up to 212,000 working couples earning less than around GBP17,000 per year losing all of their working tax credit, which is worth up to GBP3,870 per year, if they cannot increase their working hours.

(USD1=GBP0.63)

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Date:Apr 5, 2012
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