Tax credits have been in the news and this is one issue the Chancellor George Osborne is expected to review in the Autumn Statement. The House of Lords voted to reject the Statutory Instrument which contained the cut backs to tax credits.
He has promised to 'continue to reform tax credits…while at the same time lessening the impact on families during the transition'.
The key changes originally proposed were:
- lowering the income threshold for Working Tax Credits from £6,420 to £3,850 a year from April 2016
- increasing the rate at which those payments are cut. Currently, for every £1 claimants earn above the threshold, they lose 41p. It was proposed that from April 2016, the taper rate would accelerate to 48p.
There are some tax issues which may also be progressed in the Autumn Statement these include:
- IR35 - following a period of discussion proposals are expected to be announced to reform the system and operation of taxation which applies to personal service companies.
- Pensions tax relief - limiting the amount of tax reliefs for pensions. The government has been consulting to establish whether the tax relief system provides incentives for individuals to save and that the costs of pension tax relief are affordable.
The Chancellor will make his 2015 Autumn Statement on Wednesday 25 November. We will update you on pertinent announcements.
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