Families: No change for more households but poorest will benefit

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The Independent Online

The vast majority of British families will not notice any tangible difference to their bank balances after the Budget, although pre-announced tinkerings with income tax rates and a handful of new measures designed to tackle child poverty will help put a few extra pounds a year into the pockets of the least well off.

Even then, families will have to wait until next April to receive these handouts, as all three of Alistair Darling's new key measures to tackle child poverty will not come into force until at least April 2009. The most generous of these is a £50-a-year increase in the Child Tax Credit. From October 2009, the Government will also discount child benefit from its means-testing calculations for Housing & Council Tax benefit. This will be worth up to another £17 a week for low-income households. Finally, child benefit for first-born children will increase to £20 a week from next April.

For the average middle-income family, yesterday's Budget neither gave nor took away. But changes to the income tax regime, first announced last March, will have some marginal effect on every UK taxpayers' take-home pay.

From 6 April, the basic rate of income tax will drop from 22 per cent to 20 per cent, while the starting rate of 10 per cent – which currently applies to the first £2,230 of income above the personal allowance of £5,225 a year – will be abolished. At the same time, the national insurance bands will be widened, meaning that most people will pay less tax but more national insurance.

According to accountants Blick Rothenberg, these changes will amount to a net gain of around £333 for a single person earning around £32,000 a year.

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