David Crausby – 2016 Parliamentary Question to the HM Treasury

The below Parliamentary question was asked by David Crausby on 2016-10-18.

To ask Mr Chancellor of the Exchequer, what assessment he has made of the effect on family incomes of the withdrawal of tax credits as a result of the introduction of the national living wage.

Jane Ellison

The introduction of the National Living Wage in April 2016 marked an important step towards building an economy that works for everyone. At £7.20, it represented a 50p increase on the National Minimum Wage, and a pay rise for over a million low paid workers across the UK.

A family’s entitlement to tax credits depends on a number of factors including the level of income they receive. The introduction of the National Living Wage and the consequential adjustment to a family’s award will be dependent on individual circumstances. The first tax credits income threshold is £6,420, so once a household’s earnings reaches this income threshold, their tax credit award is removed at a rate of 41p for each pound of income above the threshold.