More than 5,500 families across Merseyside likely to be hit by tax credits ‘bombshell’

Feb 15 2012 by Rob Merrick, Liverpool Echo

MORE than 5,500 poorer families across the Merseyside area will be hit by a "tax credits bombshell" within weeks, Labour has warned – losing nearly £4,000 a year.

The alarm was raised over little-noticed changes that will affect couples in lowly-paid part-time work who receive the income top-ups from the Government.

At present, parents are eligible for working tax credit if they work 16 hours a week, but from April 6 that threshold will be raised to 24 hours a week.

Yet the switch – announced by Chancellor George Osborne – comes at a time when many staff are being forced to cut back their hours because of the economic slump.

One-in-five employers have slashed hours, according to a recent survey by the Chartered Institute for Personnel and Development, while only 6% have increased them.

Rachel Reeves, Labour's Treasury spokeswoman, warned that couples earning less than around £17,700 would lose £3,870 a year – unless they increased their hours to 24 each week.

She said: "This tax credits bombshell is now just a few weeks away.