More than £2 billion of cuts are taking effect over the Easter weekend, the start of the new financial year.
Families will be worst hit, with around 210,000 expected to lose all £3,870 of their working tax credit because of the rise to minimum working hours from 16 to 24 per week.
From tomorrow, families with a combined income of more than £26,000 - down from the current level of £40,000 - will no longer be entitled to child tax credits, worth £545 a year for households with one child.
Families with two children and an annual income of more than £32,000 will also no longer be eligible for child tax credits.
The changes to the system will also mean that families whose annual earnings fall due to either a lower rate of pay or loss of working hours will not be able to have their tax credits adjusted as is currently possible, unless their gross earnings have fallen by at least £2,500.
Further cuts to social security, welfare benefits and tax credits will also made by 2014 under measures set out in the 2012 budget.
The Child Action Poverty group - which has dubbed the start of the financial year Bad Friday - warned that under the Government’s current spending plans, the progress in reducing child poverty this year will be put into reverse.
It estimates that by 2020/2021 3.3 million children, before housing costs, will be in poverty, nearly double the Government target of 1.3 million.
The charity suggests the Government reviews and modifies its policies in light of the current economical circumstances and makes a number of recommendations. They include:
postpone the change to the hours rule for couples claiming working tax credits
rebalance the ratio of spending cuts to tax rises
carry out a detailed analysis of the economic impacts of welfare cuts
tougher action on tax cheats, to increase the role tax justice can play in reducing the deficit
Alison Garnham, chief executive of the Child Action Poverty Group, said, ‘This year’s holiday will feel more like "Bad Friday" for millions of families as they come to terms with over £2 billion of cuts.
‘Some of the poorest working families will lose thousands of pounds from their annual income, leaving them in a desperate struggle to pay for basics like groceries, clothes and household bills.
‘It is astonishing that the people making the smallest contribution to deficit reduction are in the richest half of the population. Ordinary families and children are now carrying the greatest burden of deficit reduction. The Chancellor’s own analysis shows he is failing the fairness test and that many of the wealthiest are let off lightly.
‘Ministers should think again about the fairness of their deficit reduction plans and act quickly to prevent the most shocking rises in child poverty for a generation.’
