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More than 120,000 households in Northern Ireland will have their tax credit payments reduced as a result of the July budget.

The details are contained in an official analysis of the budget by the Department for Social Development (DSD).

The analysis suggests the average loss per household will be £918 per year.

Tax credits are effectively a means-tested benefit paid to people on lower incomes.

They are paid to two main groups: unemployed people with children and low paid working people who may or may not have children.

Taper

The changes to tax credits in the July budget included lowering the threshold at which payments start to reduce.

Currently tax credits payments start to reduce, or taper, once a family income reaches £6,420.

From April 2016 the threshold at which payments taper will be £3,850.

There are currently 109,000 claimants in Northern Ireland who are earning above the £6,420 threshold and have a 'tapered' tax credit award.

Once the threshold is reduced to £3,850, these claimants will have their tax credit award tapered further.

An additional 12,000 claimants will also become subject to the taper once the threshold is reduced to £3,850.

The DSD analysis also looks at other welfare changes announced in the budget, including the freeze in most working age benefits up to 2020.

Using an assumption that welfare reforms will ultimately be introduced in Northern Ireland, it estimates that the July budget will take £206m off the welfare bill in 2016/17, rising to £361m in 2019/20.

The DSD analysis does not factor in the impact of the National Living Wage or increased personal tax thresholds on household budgets.