Budget 2011: view from the LITRG

The staged increases in the basic personal allowance to £10 000 will take many low income people out of tax. But it will not necessarily make them better off because of the complex interaction of the tax and national insurance with the benefits and tax credits systems.

Here at LITRG we have been modelling various scenarios including a lone parent with one child earning £10 000 a year who claims housing benefit council tax benefit working tax credit and child tax credit. She will in fact be very slightly worse off in 2011/12 despite the increase in the...