Generally, tax credits are designed to help people with lower incomes and improve their living standard. Child tax credit is one of the tax credits which is available for families with lower income.

If you have children and live in the UK, you are eligible for child tax credits to help you cover the costs of raising your child. Such benefit is available if you are responsible to raise your child who is under 16 or under 20 and in full-time education or training. However, the amount you get will depend on your income and other family’s circumstances like number of children living with you and whether your child has some disability. At present, families can claim up to £2,780 for each child along with additional payments available for disabled children.

Changes to Child Tax Credits

From April 2016, the amount of income threshold for child tax credits is set to be reduced to £12,125. Moreover, from April 2017, you will only be able to claim tax credits for the first two children and will no longer be able to claim £545 “family element” which was paid before for each child. This will only apply to third and following children born after April 2017.

Alternatively, you’ll still be able to claim the disabled child premium for any of your children eligible to get it. If you’re already claiming tax credits and have more than two children, these changes will not affect you.

The government plans to cut country’s welfare bill with this change. At the same time, they are compensating this change with the increase in the minimum wage to National living wage and some additional free childcare. However, households where no-one works will be affected the most from this change because they will not benefit from the minimum wage increment.

According to the research, many working families in London are believed to be affected by these changes for which the government has faced a backlash since the announcement of child tax credit cuts.