In the 2023 tax year, Working for Families tax credits (WFF) came to a total of $2,947 million. This number is a 5.6% increase from the 2022 tax year and follows 1 April 2022 changes to the Family Tax Credit and Best Start Tax Credit entitlements albeit with a steeper abatement rate.
The above graph shows the total entitlements paid for WFF between 2001 and 2023. The total entitlement paid increased from $1,037 million in the 2001 tax year to $2,751 million in the 2010 tax year following changes in the WFF entitlements during this period and the introduction of the In Work Tax Credit (IWTC) in 2007. Between 2010 and 2018, total entitlements for WFF declined to $2,238 million in 2018. Following 1 July 2018 reforms to WFF and the introduction of the Best Start Tax Credit (BSTC), total entitlements to WFF increased to $2,928 million in 2020. Entitlements to WFF increased in the 2023 tax year and totalled $2,947 million.
The increase in total WFF expenditure in the 2023 tax year follows changes to WFF entitlements on 1 April 2022. These included:
- Increasing the annual Family Tax Credit entitlement for the first child from $5,878 to $6,642.
- Increasing the annual Family Tax Credit entitlement for each subsequent child from $4,745 to $5,412.
- Increasing the annual Best Start Tax Credit entitlement for each child from $3,120 to $3,388.
- Increasing the WFF abatement rate which applies for income earned over $42,700 from 25% to 27%.
Following these changes the average amount of annual WFF paid per family increased from $8,096 in the 2022 tax year to $8,778 in the 2023 tax year, up 8.4%.