Tax and benefit changes – ‘Black Wednesday’ or happy families?

With the coalition government claiming 80% of households will benefit, and Labour claiming it's a 'Black Wednesday' for Britain's families, how will the new changes affect your family?

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As a raft of changes to tax and benefits come into force today, shadow chancellor Ed Balls claimed it was a ‘Black Wedneday’ for British households, with working families set to see their incomes reduced by up to £1,560 a year.

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Although the personal income tax allowance has been raised by £1,000 to £7,475, National Insurance employee contributions have risen by 1%, child benefit and working tax credits have been frozen, and the rate of the childcare element of the working tax credit has been reduced from 80% to 70% of total costs.

Combined with the 2.5% VAT rise in January, increases in basic household costs such as food, fuel, gas and electricity, it seems many families are set to have their already-squeezed finances, squeezed even further.

The treasury attempted to parry the critical jabs by releasing figures showing a couple with one child and a combined income of £25,000 will be £12 a week better off, a couple on a combined £60,000 with two children will gain £5 a week, and a lone parent on £12,500 with one child will gain £10 a week.

As political blows were traded across the media, Labour attempted an uppercut with its calculation that, as a result of the three-year freeze on child benefit, a family with one child would be at least £130 a year worse off by 2013.

To sum up, financial organisation Credit Action said that, of the 44 changes taking place today, 26 would have a negative effect on household income, while just 13 will have a positive effect.

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So, are we all in this together? Tell us how the changes will affect your family and future below.

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