Baby Boom

Will Changes to Child Tax Credits Cause a Baby Boom in 2016?

If you’re just coming home from work and have been listening to the radio then you may have heard that some pretty big changes to child tax credits were announced today in the chancellor’s budget. The most talked about change from a family point of view is that from April of 2017, child tax credits is only going to be paid for the first two children to be born in any one family.

On the surface it, it seems that the changes are not going to affect families who are already claiming child tax credits for more than two children currently, instead they will only apply to children who are born after April 2017. This is backed up in this article from the BBC where they have stated that:

‘Support for children through tax credits and universal credits will also be limited to two children, affecting children born after April 2017 unless the third child is the result of twins, triplets or other multiple birth.’

For me this setup seems to throw up a very interesting question, will we now see a huge baby boom in 2016? With parents who have been considering having a third child for some time now deciding to go for it in the hope that their third child will be born in time to qualify for child tax credits under the current rules?

If this does materialise then I’m not so sure that it would be the wisest thing to do, as what today has certainly proven is that the rules surrounding the qualification for and payment of child tax credits can change at any time, as they did today. It wouldn’t surprise me at all if this were to happen though, and just think about what kind of pressure this might place on an already overstretched primary school system in the coming years if it did. My youngest boy is just starting school this year and the amount of parents that we know in our local area who missed out on their first choice of primary school place for their child was quite incredible. It seems we may have to get used to this going forward.

The other change that was announced was a lowering of the income threshold for Working Tax Credits. I had a quick look into this and as far as I can tell it seems that under the current system, if you receive Working Tax Credits and your annual household income is below £6,420, you will automatically receive the maximum amount of all the elements you qualify for. If you earn more than this, then the maximum amount is reduced by 41p for every pound of income you earn over this threshold. When these budget changes come into effect however, this income threshold will reduce form £6,420 to £3,850. So I’m assuming that this will mean that families who currently earn over £6,420 will then receive around £1,053 per year less in Working Tax Credits than they would have received previously (£6,420 -£3,850 x 41p) and if your earnings are somewhere between that bracket then you will receive proportionally less depending on how much you earn. I’m not 100% sure on those figures so feel free to correct me if you think they need changing, it’s been a long day and this post was more about the baby boom. :-)

Do you think the changes to Child Tax Credits will cause a baby boom in 2016?

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