A family with children attending independent schools and enjoying an income of €47,000 a year will have nearly €120 per month more cash in hand as a result of the new parent tax and higher credits for private schooling.

An exercise carried out by The Times calculated the savings people will make next year as a result of the new income tax category for parents with dependent children, taking into consideration three different scenarios.

The cost-of-living wage increase of €4.66 that will kick in next January was also taken into consideration.

The workings show that Godwin and Jane, a fictitious couple who both work and jointly earn €47,000 a year, will see their annual income tax bill go down by €940 when they shift to the parent tax category.

The couple’s son, 12, attends an independent secondary school and is also involved in a recognised sports club. Their seven-year-old daughter goes to an independent primary school and attends drama lessons at a private institution.

Until this year, Godwin and Jane benefitted from deductions of €2,800 from their taxable income as a result of their children’s private schooling. They also claimed back €100 for their son’s sports activity.

But the higher thresholds set in the Budget for parents to claim back some of the expenses for private schooling will see the couple benefitting from a deduction of €3,900 next year.

They will continue to claim back their son’s sporting fee and they will now also be able to claim back their daughter’s drama classes fee up to a maximum of €100.

Godwin and Jane will also receive an additional €200 in children’s allowance next year after government increased the basic flat rate to €350 per child from €250.

On the downside, the couple will not see their water and electricity bill drop and with tariffs expected to remain as they are today, utilities will remain a hefty household expense in 2012.

The savings experienced in the other two family scenarios drawn up by The Times are not as significant as Godwin’s and Jane’s.

David and Angela, with one child, will see their tax payments fall by €503 next year, primarily as a result of the new parent tax category. But they will also be able to deduct up to €100 from their taxable income for their son’s drama lessons after the incentive was extended to cultural activities.

The changes mean David and Angela will have an extra €82 cash in hand every month next year as a result of the tax changes alone. They will also benefit from an increase in €100 in children’s allowance.

Philip and Rita, who jointly earn €27,000 and whose two children attend a state school, will see cash in hand increase by €63 a month.

With the non-taxable portion of income going up to €9,300 under the new parent category, Rita will not pay income tax next year.

The couple will benefit from tax savings of €264 annually and they will continue to claim back their eldest son’s football training fee up to a maximum of €100.

Philip and Rita will also receive €200 more in children’s allowance but on the negative side the water and electricity bill which eroded their disposable income will remain stubbornly hefty for the third year running.