§ Mr. Webb
To ask the Chancellor of the Exchequer what will be the combined marginal withdrawal rate faced by someone who is receiving partial help with childcare costs under the proposed tax credit scheme and who is also(a) paying basic rate tax and NICs or (b) paying basic rate tax and NICs, and receiving housing benefit and council tax benefit. 
§ Dawn Primarolo
[holding answer 24 March 1998]The Working Families Tax Credit will provide substantially more financial support than is available at present under Family Credit and hence will significantly improve the reward for working. For example a two-child family with an after income tax of £250 and £60 a week in childcare costs will receive £36.70 more a week in WFTC than under FC.
All those above the income threshold and still receiving the WFTC, including the childcare tax credit, will face marginal deduction rates of:
- (a) 69.85 per cent. if they are paying basic rate tax and NICs (reduced from 79.9 per cent. at present); or
- (b) 95.48 per cent. if they are paying basic rate tax and NICs, and receiving housing benefit and council tax benefit (reduced from 96.99 per cent. at present).
However, due to the increased income from the Working Families Tax Credit, very few families will face the combined tapers of WFTC, housing benefit and council tax benefit. About 20,000 families, 0.1 per cent. 243W of those paying tax or NICs will face combined marginal deduction rates greater than 90 per cent. Less than 2 per cent. of families on WFTC will face all three tapers.