June 9, 2009

Reforming the UK Family Tax and Benefit System

By Peter Saunders; Edited by Natalie Evans

Reforming the UK Family Tax and Benefits System reveals that the average middle-income family today pays £6,016 in tax and National Insurance contributions, but gets back £5,383 as social security and family payments. This unnecessary churning has undermined family independence and self-reliance and turned four-fifths of the nation’s families (around 5.5 million households) into welfare claimants.

Here are some of the recommendations from this report:

  • Tax allowances for dependent children and for non-working spouses should be restored. This would allow working parents to keep more of what they earn, rather than going to the state for top-ups, and it would reduce wasteful churning and ‘middle class welfare’.
  • Tax credits should be retained, but cut back so they are only claimed by low income working families
  • The tax credits system should also be overhauled. There should be a single family tax credit, normally payable annually in arrears so as to eliminate the overpayments problem and reduce fraud.


Natalie Evans

Deputy Director, 2008-2011

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