The Government's new tax reforms come into effect today, here's a run-down of the main changes:
- The largest rise in personal allowance, which means that no one pays any tax until they earn more than £9,440 per year.
- The higher rate personal allowance threshold is to fall to £41,450.
- The top rate of income tax will fall from 50p to 45p.
Shadow Chancellor Ed Balls has renewed his attack on the Government's new tax reforms, which come into effect today.
The Labour MP said: "David Cameron and George Osborne are today giving millionaires an average tax cut of £100,000 while they make millions of pensioners and working people on middle and low incomes worse off.
"Families with children are being hit hardest of all. For example, a one earner family with children will be a staggering £4,000 worse off on average this year because of tax and benefit changes since 2010.
"And this is on top of the income squeeze we have seen over the last three years as a flatlining economy has seen prices rise faster than wages."
He added: "These figures show the full picture David Cameron and George Osborne do not want you to see. They reveal that any gains ministers boast about from the rise in the personal allowance are swamped by higher VAT, cuts to tax credits and child benefit.
"People in work, people looking for work, stay at home mums and pensioners hit by the granny tax are all being squeezed like never before. Millions are paying more while millionaires pay less."
Senior research economist at the Institute For Fiscal Studies, James Browne, has told ITV News that the Government's decision to reduce the top rate of income tax from 50p to 45p is a "big giveaway to a relatively small group of people at the very top".
Struggling families will lose thousands of pounds in the new financial year while Government tax reforms save 13,000 millionaires an average of £100,000, Labour claimed today.
Among a raft of changes coming into effect today are the largest rise in the personal allowance, which means that no one pays any tax until they earn more than £9,440, and a fall in the higher rate threshold to £41,450.
But a one earner family with children will be £4,000 worse off on average in the next 12 months under changes introduced since the Coalition took power, according to Opposition analysis of figures published by the independent Institute for Fiscal Studies (IFS).
Overall, Labour claims UK households will be £891 a year worse off on average in the new tax year as a result of cumulative benefits cuts and tax rises.
The Government's controversial decision to reduce the top rate of income tax from 50p to 45p will benefit 267,000 people on more than £150,000, including saving 13,000 earning £1 million an average of £100,000, it added.
Shadow chancellor Ed Balls said: "The whole country will today see whose side this Conservative-led Government is really on and who is paying the price for their total economic failure."