Families braced for tax credit reductions

couple looking at their finances

couple looking at their financesMany of us will know the importance of tax credits, with these benefits helping to top up our incomes each month.

However, new research suggests that changes to the benefit system could undermine new Government tax reforms which are designed to assist struggling families.

Resolution Foundation, an independent think-tank, said that while April will see the introduction of tax cuts worth £1 billion, tax credit reductions worth £2.5 billion might limit their impact.

According to the study, which The Independent commissioned, the forthcoming increase in the personal tax allowance will be undermined by other tax reforms.

So despite being billed as a good thing for us families, there may now be doubt over whether we'll actually see the benefits or not.

Speaking to the newspaper, Matthew Whittaker, senior economist at the Resolution Foundation, stated: "April's personal allowance increase will undoubtedly benefit low to middle income workers, but millions of families will find that any gains will be dwarfed by cuts in their tax credits."

To find out more about the tax credits which are on offer to families, check out our guide to the UK's benefits system.