Government changes to Tax Credits defeated

Government changes to Tax Credits defeated

28 October 2015

Potentially good news for lower paid contractors working through an umbrella company is that on 26th October 2015 the House of Lords voted not to accept the Chancellors proposed changes to tax credits that will affect the entitlement to the credits for low income families.

The proposed changes are expected to result in some families being up to £1,300 worse off per year by 2020. The Government are trying to reduce the earnings limit for entitlement to the Working tax Credit and the Child Tax credit.

The Government will now need to include transitional arrangements to help those that will be worse off by the changes. The Government’s argument has been that other changes they are making such as increases of the national minimum wage to the national living wage will offset this.

The proposed changes were expected to save the Government over £4billion in welfare costs.

The defeat to the Government has raised new questions about the UK constitution in that is right that an unelected house can stop changes put forward by elected members of Parliament.

If you are a contractor and want to ensure you’re maximising the relief’s and benefits you are entitled to please call Umbrella for a free review on 0800 121 6513. Or email: