Tax Credits and Benefits Changes 2013 – How They Will Affect You

How did the 2013 Budget affect your benefits and tax credits? While many of the Chancellor’s Budget proposals have been reported across the media, many changes to the benefits system that have not received widespread coverage come into force in April 2013.

And, The Guardian reports that ‘low-income households are among the big losers from the budget.’ Indeed, the government’s own analysis reveals that in the 2013/14 tax year the bottom 10 per cent of households by income will be £200 worse off, compared with 2010-11.

We have put together this useful guide to the changes that will affect Tax Credits and other benefits after April 2013. Keep reading to learn how these changes will affect you.

Changes to tax credits in 2013

The main elements of tax credits will not rise at all in the 2013/14 tax year, equating to a real terms cut. This includes the basic element of the working tax credit (WTC), which stays at £1,920, and the family element of the child tax credit (CTC), which remains at £545.

From 6 April 2013, the child element of CTC rises by £30 a year (57p a week) to £2,720. In addition, the disabled child element will go up by £65 to £3,015 a year. Most key benefits and tax credits will rise by just 1 per cent a year, which The Guardian says is ‘below projected inflation and a 4 per cent real terms cut.’

The total amount of tax credits that you can claim for is reduced by 41p for every £1 earned over £6,420 – and this figure is also frozen for the coming tax year. The government online calculator at gives an idea of what you can claim.

The introduction of a benefits cap

From 2013, there will be a £26,000 cap on the total amount of benefits that you can receive if you’re a working-age person in the UK. This includes jobseeker’s allowance, housing benefit, child benefit and carer’s allowance. This will limit your benefits to £500 a week for families, or £350 for childless single-adult households.

This cap will be introduced in April across four London boroughs and then rolled out by the end of September.

Bear in mind that this benefit cap will not affect you if you, your partner or any children that you are responsible for qualify for a number of benefits, such as disability living allowance.

The ‘bedroom tax’

Are you aged between 16 and 64 and on housing benefit? If so, from April 2014 your housing benefit will be reduced by 14 per cent if you have a spare bedroom or by 25 per cent if you have two spare bedrooms.

Children under 16 of the same gender are expected to share a bedroom while children under 10 are expected to share regardless of gender.

Council tax benefit

Council Tax benefit will end on 1 April 2013. Local councils are expected to deliver a replacement scheme for non-pensioner residents on a low income and while pensioners are protected, in general the most anyone of working age will receive is 85 per cent of their council tax bill.

Do these changes affect you? Please share your comments below.

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