Grahame Morris – 2016 Parliamentary Question to the HM Treasury

The below Parliamentary question was asked by Grahame Morris on 2016-03-04.

To ask Mr Chancellor of the Exchequer, what estimate his Department has made of the number of people in Easington constituency who will be affected by the reduction of the income rise disregard for tax credits to £2,500.

Damian Hinds

This information is not held and statistically reliable projections at constituency level could only be provided at disproportionate cost. From April 2016, the income rise disregard – the amount by which a tax credit claimant’s income can increase within a year before their tax credit award is adjusted – will be reduced from £5,000 to £2,500.

The only people who will be affected by this will be those who see an increase in their in-year income by more than £2,500. There will be no net cash losers because their income will have increased.

In the subsequent tax year, a claimant’s tax credits award will be calculated in the usual way, using their full annual income for the previous year to determine their tax credit entitlement. This means that after the change in the tax year, whether the claimant’s increase in income was above or below the disregard level, their tax credit award for the following year will be adjusted to what it would have been had no disregard existed