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Budget decision 'a wasted opportunity to help the poorest'

The recent budget decision to increase the personal tax allowance is 'a wasted opportunity to help the poorest' according to the UK’s largest children’s charity Barnardo’s.

Barnardo's support the most vulnerable

Barnardo’s UK Director of Strategy Puja Darbari, responded to the Governrment raising the threshold at which the low earners pay income tax from £9.5K to £10.5K, after recognising a flaw in the way tax links to Universal Credit.

The average poor, lone parent family will gain just £74 per year from the measure. This calculation is based on a single parent family with two children aged six and two, living in London, and working full time at minimum wage. In contrast, a higher earning family not on Universal Credit would gain four times more money than poor families from the planned changes to personal tax allowances – in total £294 per year. The cause of this disparity is due to the ‘taper’ in the Universal Credit system, which sees the extra earnings gained by the measure matched with a simultaneous reduction in working benefits – effectively cancelling out much of the cash gains.

Barnardo's support the most vulnerable

Puja said:  “The government has deliberately chosen to ignore a flaw in how tax links to Universal Credit, reducing what struggling families stood to gain. The government has wasted the opportunity to help the 3.5 million children still living in poverty in the UK instead making its priority raising the tax threshold for higher earners.

“More than six in ten children in poverty live in households where somebody goes to work, yet higher earners stand to gain up to five times more than the poorest from changes to personal tax allowances.”

Neera Sharma, Barnardo’s Assistant Director of Policy and Research, said:

Tinkering with increasing the income tax threshold whilst simultaneously reducing working benefits for the lowest paid, does little to relieve the burden of in-work poverty. With the majority of poor children now living in working families who are unable to ‘strive’ their way out of poverty, the Government must marshall every resource to ensure that work pays for low earners.

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