It looks like Britain’s poorest families are bearing the brunt yet again. They’ve suffered the most from the government tax hikes and welfare cuts put in place since 2010. And the shortfall has been quantified as an average loss of £1,127 a year. On the other hand, the wealthier you are the more you will probably be contributing to the deficit in future.

  • 20% VAT and higher personal tax thresholds have had an impact, as have a clutch of benefit cuts. In total the 10% lowest earners dropped 4% income while the richest ten percent lost just 2.6% of their income.
  • Middle income working age people without kids were amongst the winners, mostly because they didn’t claim many benefits in the first place. They also benefited from the coalition’s increased income tax personal allowances.
  • The ‘squeezed middle’ were least affected by tax credit reductions and housing benefit cuts. They managed to avoid income tax rises and swerve limits on tax-free pension contributions, which hit people at the richer end of the scale harder.
  • Middle-income earners with children fared worst of all, shedding tax credits and child tax benefit. But the wealthiest Brits saw their direct tax liabilities go up thanks to higher national insurance rates, lower 40% tax rate threshold and restrictions on pension contribution tax relief.
  • As a rule people in London and the south east were the worst hit. People living in private rented accommodation, especially in London, also suffered more than average from the government’s housing benefit cap.

As Cathy Jamieson, the shadow Treasury minister, commented: “Families with children have been hit hardest of all by David Cameron’s choices – a clear betrayal of his promise to lead the most family-friendly government ever.”

There are rumours of more post-election welfare cuts which, if true, will only make the lot of those who are already struggling even worse. On the bright side, George Osborne has said there won’t be any more income tax or VAT rises.

What about you?