What is really going on in politics? Get our daily email briefing straight to your inbox Sign up Thank you for subscribing We have more newsletters Show me See our privacy notice Invalid Email

Tory MPs have just voted to cut almost £1billion from tax credits - despite George Osborne promising he wouldn't slash the benefit.

The little-known catch hitting hundreds of thousands of people was formally approved in a brief vote with no debate tonight.

Chancellor Mr Osborne pulled a screeching U-turn over his plans to slash tax credits for 3.2 million families by £1,300 a year.

But he didn't cancel changes to the 'income rise disregard', which says how much a claimant's pay can rise in one year before tax credits are recalculated.

Read more:How did YOUR MP vote on the £1bn cuts to tax credits?

That means families will be hounded for back payments if their income rises by more than £2,500, half the current £5,000 rate.

The vote in the House of Commons passed with a majority of 44 after 272 MPs voted in favour and 228 voted against.

Labour voted against the cut to tax credits while Tory MPs were whipped in favour.

The move was not debated partly because it was put before MPs in the form of a small-scale Statutory Instrument, not as part of an Act of Parliament.

Official figures show the change will rake in an extra £935million for the Treasury by 2020.

And 800,000 people a year will be hit by the income rise disregard under the new rules.

Video Loading Video Unavailable Click to play Tap to play The video will start in 8 Cancel Play now

When the figures emerged last month, Shadow Chancellor John McDonnell claimed Mr Osborne "says one thing in public and does another when he thinks no one is looking".

He added: "It's completely shameful when you consider that 800,000 working people, almost the equivalent of a city the size of Leeds, face losing £300 a week when the Tories are cutting taxes for a wealthy few.

"This is something George Osborne needs to urgently reverse in full in the budget next month, and it's something he could easily do if he wants to.

"There will be many Tory MPs who told their constituents that their Chancellor was not cutting their tax credits who'll now be left looking silly."

(Image: PA)

An Impact Assessment showed lowering the threshold will save the Treasury £170m in 2016/17, £225m in 2017/18, £250m in 2018/19, £180m in 2019/20 and £110m in 2020/21.

A Treasury spokesman said: “It is a simple matter of fairness and common sense that tax credit awards are reviewed as people’s incomes change.

“It isn’t right that someone earning significantly more should do just as well in terms of tax credits than someone earning less.

“Lowering the maximum annual pay rise that is disregarded to £2,500 will simply return the system to the same level as when tax credits were first introduced.

“By definition there will be no losers because people’s increase in income will outstrip any reduction to their tax credit award.”

What is the income rise disregard - and will it hit me?

(Image: Reuters)

The ' income rise disregard ' will be halved as planned, despite a U-turn on the most damaging parts of tax credit cuts.

So what is this?

Currently your income can rise by £5,000 within the year you've claimed for, without you having to recalculate and pay your tax credits back.

From April 2016, that amount is being halved to £2,500.

Tax officials will pay private debt collectors to target families who owe the government more than £3,000.