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<p>The Summer Budget offered a new deal for working people. It means Britain moving
from a high welfare, high tax, low wage economy to a lower welfare, lower tax, higher
wage society.</p><br /><p>A new National Living Wage for workers aged 25 and above,
initially set at £7.20 per hour from April 2016, will directly benefit 2.7 million
low wage workers, and up to 6 million could see a pay rise as a result of a ripple
effect up the earnings distribution. The new National Living Wage will boost pay for
those currently earning the National Minimum Wage by £4,800 a year by 2020 when the
National Living Wage is expected to rise to over £9 per hour.</p><br /><p>To help
working families keep more of what they earn, the personal allowance will increase
to £11,000 in 2016-17 and £11,200 in 2017-18. The government has committed to increase
the personal allowance to £12,500 by 2020 which will mean that a typical basic rate
taxpayer will see their income tax cut by £1,205 a year compared to 2010.</p><br /><p>An
illustrative renting family with two children, where one parent works full-time on
the minimum wage, will be over £2,400 better off in cash terms by 2020.</p><br /><p>The
government set out its assessment of the impacts of the Summer Budget policies in
the Welfare Reform and Work Bill on 20<sup>th</sup> July 2015. Taken together, the
introduction of the National Living Wage, increases in the personal allowance and
welfare changes mean that 8 out of 10 working households will be better off as a result
of the Summer Budget.</p><br /><p>In response to a request from the Secondary Legislation
Scrutiny Committee, the government has chosen to produce and release an impact assessment
on the tax credit changes to the Committee. The impact assessment shows that 60% of
the tax credit savings come from the half of tax credit claimants with the highest
income.</p>
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