The Scottish Government has produced an initial assessment of the UK Budget 2015 benefit and tax reforms, considering their impact on households in Scotland. The analysis reveals that up to 250,000 Scottish households are likely to be affected, once the reduction to income thresholds in tax credits and work allowances in Universal Credit takes effect in April 2016.
The Institute for Fiscal Studies estimates that the tax credit proposals announced in last week’s Budget are likely to cost working families across the UK an average of £1,000 per year. The Scottish Government’s analysis confirms that the planned increase to the minimum wage is unlikely to be enough to compensate for the impact of the Budget’s benefit and tax reforms on lower income households in Scotland.
An earlier report by the Scottish Government on the impact of the Welfare Reform Act 2012 showed that the changes to welfare implemented since 2010 are likely to reduce benefit expenditure in Scotland by around £2.5 billion in 2015-2016 alone.