Tax changes set to hit families hard

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More than 200,000 families will lose tax credits worth almost £4,000 a year unless they significantly increase their working hours, according to figures highlighted by Labour.

Under changes due to come into effect on April 6, couples with children will have to work a total of 24 hours a week to qualify for Working Tax Credit, rather than 16 hours as at present.

Official figures obtained by Labour’s Treasury spokeswoman Cathy Jamieson showed that 212,000 households, including 470,000 children, could lose the £3,870-a-year credit as a result.

In a speech to shopworkers’ union Usdaw today, Shadow Chief Secretary to the Treasury Rachel Reeves will describe it as a “tax credits bombshell” which will hit “parents in the squeezed middle who are working and trying to do the right thing”.

The Leeds West MP is expected to say: “This is a deeply unfair change from a Government that is increasingly out of touch with parents feeling the squeeze and struggling to juggle work and family life.

“Raising taxes and cutting spending too far and too fast has seen unemployment rise and the economy go into reverse, and many employers are cutting people’s hours. In this climate, very few people in part-time work will be able to increase their hours by up to 50 per cent at the moment.

“And for a couple with children losing around £4,000 a year, or £75 a week, from this change could mean going out to work makes no sense.”