Self-employed to benefit from Tax Credits U-turn

Cuts to tax credits will no longer go ahead after Chancellor, George Osborne announced a surprising U-turn in today’s Autumn Statement.

During Mr Osborne’s annual update on the Conservative Government’s plans for the economy, the Chancellor also unveiled the first Comprehensive Spending Review since October 2010.

Tax credits, which are paid to supplement the income of parents and certain lower-income workers, are to be replaced by a Universal Credit system which will be “phased in” as part of key plans to slash Britain’s welfare bill by £4.4bn.

“Tax credits are being phased out anyway as we introduce universal credit. That means the tax credit taper rate and threshold remain unchanged; I propose no further changes,” said Osborne.

“I’ve listened to the concerns and understand them,” added Osborne.

When tax credit cuts were first mooted the opposition to the cuts said the poorest would be hurt the most, with 3.3 million families set to lose an average of £1,300 next year.

In an historic move, the Lords voted to delay the tax credit reforms and Mr Osborne has now gone one step further in his 2015 Autumn Statement to shelve any cuts in favour of bringing through the Universal Credit system.

Jo Nockels FCCA FMAAT, senior training and communications manager, TaxAssist Accountants, welcomes the decision and believes it will further underpin the UK’s entrepreneurial culture.

“We are incredibly pleased to hear the Chancellor abandon his plans to cut tax credits,” said Nockels.

“Tax credits are a vital contribution to household income for low earners and working families.

“Small business owners do not benefit from the National Minimum Wage, and reducing tax credit awards could have made some people think twice about running their own business.”

Date published 25 Nov 2015 | Last updated 25 Nov 2015