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Children in families receiving tax credits

Key points

  • Overall, half of 0 to19-year-olds in London live in a family that receives tax credits.
  • But in some boroughs the rate is much higher - around 70% in Tower Hamlets, Hackney and Newham.
  • The lowest level is in Richmond at 20%.

0 to19-year-olds in a family receiving tax credits

What does the graph show?

The graph looks at the proportion of children benefiting from tax credits in each borough. Child tax credits can be claimed by working and workless households, while working tax credit is available to those who work a certain number of hours but whose earnings are relatively low. Overall, half of 0 to19-year-olds in London (1.1. million) live in a family that receives tax credits. But in some boroughs the rate is much higher - around 70% in Tower Hamlets, Hackney and Newham. The lowest level is in Richmond at 20%.

It also shows three types of tax credit recipients: those in workless families receiving child tax credit, those receiving both working and child tax credits, and those in work getting child tax credit only. This distinction is important due to the government's planned changes to tax credits. The freeze in the value of tax credits for four years will affect all claimants as the value of their tax credits falls relative to prices. On top of this the point earnings can reach before tax credits start to be withdrawn will be reduced and the rate at which they are withdrawn after this earnings level is reached will be increased. These changes will substantially lower the tax credit income of most of those families in work, which in 2013/14 was on average £8,100 a year in London, benefiting 640,000 children.

In the graph, the bars are ordered by the proportion of children in working families receiving tax credits; these children are highly likely to see a cut in their family's tax credit income due to the cuts mentioned above. It shows that the cuts will affect at least 40% of 0 to19-year-olds in Newham, Hackney and Brent, but a substantial proportion of children across most London boroughs are also likely to be affected.

Data used

Child and Working Tax Credit Statistics, Finalised annual awards for 2013-14, HMRC & Mid-year population estimates for 2014, ONS.

Indicator last updated: 20 October 2015