What Does the New Child Tax Regime Mean for You and Your Family?
The new child tax credit cuts came into practice on the 6th of April 2017. Under the new rules, families with two kids already will not be able to enjoy any extra benefits by way of universal credits or tax credits.
Before now, children covered by the benefit were able to enjoy an extra payment of £2,780 each year. This explains why children rights groups and charities are against the new cuts.
Many of them believe that all children should be protected against the effects of poverty such as poor academic performance, illness and mental health issues. The new cuts do not just mean that all new third children will not get any benefits. Firstborn children will also see an extra £545 a year cut off their yearly benefits.
The changes were made by the government to reduce Government spending by £5billion a year and over 4 million families could be affected.
How Will Your Family Be Affected?
- If you are making new Child Tax Credit claims, you need to keep in mind that you can only do so for your first two. The only exemptions are for people with natural multiple births.
- The family element can no longer be claimed either. However, parents with children that qualify for the disabled child premium can still claim it.
- If you already have more than two children and are already claiming Child Tax Credits, you will not be affected. Keep in mind that the new changes are for newborns with birthdates on or after the 6th of April, 2017.
How Can Families Cope with the Shortfall?
Now more than ever, families are under obligation to ensure that they are in the right financial position to welcome a third child. It is vital to go over family finances before committing to a third child. Apart from the monthly income, other financial elements that can have an impact on the quality of life of your third child should be reviewed. This includes all kinds of debt and savings. Speak to your financial adviser for help if you need to. £2,780 over a decade is a sizable loss that will only look heavier with every new child added.
If your family is in a clean bill of health financially, the new changes should have no impact on your desire to increase your family size.