Benefit Changes that will affect New Parents

The government are making cuts to a several key grants and other welfare entitlements for new parents. Including

• Health in Pregnancy Grant
• Sure Start Maternity Grant
• Baby element of Child Tax Credits
• Toddler element of Child Tax Credit
• Child Trust Fund

For some this can be a worth up to £1735 over a pregnancy and the child’s first year. These loses aren’t being offset by other benefits so there loss of money will be felt.

Higher income families, working families with children could actually be looking a higher loss from the result of changes to the income disregards in Tax Credits and reductions in childcare element in Working Tax Credit.

Also changes to tax credit income disregards may also lead to substantial tax credit overpayments for many new parents returning to work following maternity leave.

Although the Government are providing additional support to many parents through increases in the child element of child tax credits, they have also announced several cuts through the budget and the Comprehensive Spending Review which will have an impact on parents with new children.

The main things that will affect new parents are:

The Sure Start Maternity Grant will apply to the first child only from April 2011 …more info at Direct Gov

The Health in Pregnancy grant was abolished in January 2011…more info at HMRC

The Baby Element of Child Tax Credit will be abolished from 2011-12…more info from HMRC

The planned supplement to Child Tax Credit for children aged 1 and 2 from 2012-13 will be reversed.

Government contribution to the Child Trust Fund was stopped altogether from January 2011.

The Tax Credit income disregard of £2,500 for falls in income will be introduced from 2012-13 more info from Direct Gov

Reducing the percentage of childcare costs that parents can claim through childcare element of Working Tax Credit from 80% of childcare cost to 70%…more info from Direct Gov

[box type=”info”]With all these changes it can be confusing, I would always recommend checking your circumstances at Turn2us, Direct Gov and HMRC [/box]