Wealthier families to lose child tax credits

More than 5,000 middle-class families across Oldham are set lose almost all of their child tax credits worth hundreds of pounds each year.

The benefit is paid on a sliding scale for families with incomes of up to £58,000 — or £66,000 for those with a child under one.

But under Coalition plans, families earning more than £40,000 will have their payments stopped in April, 2011. The following year those earning more than £30,000 will also receive nothing and those earning £25,000 will see the allowance cut to £460 a year. The Government claims people with more than one child will still be given some money but no figures have been released.

Currently, couples with a combined income on the higher end of the threshold are paid £545 a year and those on lower incomes are also entitled to £2,300 a year per child.

The child element is then gradually tapered dependent on income. New figures show 1,200 families in the parliamentary constituency of Oldham East and Saddleworth and 800 in Oldham West and Royton earn more than £40,000 and will lose their tax credits from April. In addition, 900 families will be affected in Ashton, which includes Hollinwood and Failsworth.

A further 1,700 families in Oldham East and 1,300 in Oldham West will lose out from April, 2012, in addition to a 1,600 in Ashton.

The benefit was one of Gordon Brown’s principal policies as Chancellor, and 90 per cent of families currently have some entitlement at a cost of £20.7 billion a year.

Shadow work and pensions secretary Yvette Cooper said: “Cutting child tax credit for families with a joint income of £30,000 or £40,000 a year will hit a lot of parents who already find themselves overstretched.

“That help makes a particular difference to working mothers and in many cases is what helps them afford to work part-time.”