Child benefit to be paid to more families

The chancellor says changes mean 170,000 families will not pay charges on the benefit.
Child benefit to be paid to more families
Father holding his babyGetty Images

The chancellor has increased the income level at which people start being charged for receiving child benefit.

Previously, the benefit began to be withdrawn when one parent earned more than £50,000 a year.

But Jeremy Hunt said the threshold for the benefit charge would go up to £60,000 from April.

He also announced plans to change the system, which has been criticised for being unfair to households with one high-earning parent.

Under the current system, if one partner earns more than £50,000, child benefit starts being gradually withdrawn, such that if they earn £60,000, they do not receive any child benefit at all.

This means two parents earning £49,000 a year each would receive child benefit in full – but a household with one working parent or a single-income household earning more than £50,000 would see the benefit cut.

This threshold figure had not changed since 2013, despite childcare costs and the cost of living soaring over the last few years.

However, the chancellor has now raised the lower threshold, and said that the top of the taper at which the benefit is withdrawn completely will go up to £80,000.

He said the changes would take 170,000 families out of paying the charge altogether.

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The government estimates that in total, almost half a million families with children will save an average of £1,260 next year because of the higher taper and threshold.

Child benefit is paid to families in the UK with children under the age of 16, or under 20 if they are still in types of full-time education or training such as studying for A-levels or Scottish Highers.

You receive £24 a week for one child and £15.90 for each additional child. Those amounts are due to rise to £25.60 and £16.95 a week in April.

In his speech on Wednesday, the chancellor described the benefit as a “lifeline” that helped parents with many additional costs. But he acknowledged that the existing system could be “confusing and unfair” because of how single parents are affected.

So he announced that by April 2026, the plan is to move it to a system of household income, not that of individuals.

“We will therefore consult on moving the high-income child benefit charge to a household-based system to be introduced by April 2026,” the chancellor said.

However, Mr Hunt cautioned that this would not be a “quick fix”.

Dad-of-two David Stuart, from Whitburn in Scotland, welcomed the changes announced to child benefit.

David Stuart and family

Getty Images

“I’m glad they not just raised the threshold, which would have just kicked the can down the road, but it’s absolutely the right thing to move towards it being household-assessed,” he said.

“Obviously it will take time but I understand that.”

David earns £70,000 and his wife earns £10,000. He said the changes announced in the Budget mean “we could claim again and then potentially keep up to 50% of the benefit for the next couple of years, which seems positive”.

“But the main thing is it’s fairer,” he said.

Dr Mary-Ann Stephenson, director at the Women’s Budget Group, said that she appreciated the increased threshold as a “first step”.

“The change will be a relief to many parents, especially lone mothers, who are currently losing out on what should be a universal benefit for children,” she said.

But she pointed out that the organisation was “very concerned” about a potential move to a household-based test for child benefit.

“Independent taxation and benefits are a key principle of women’s economic independence,” she said.

Responding to the chancellor’s Budget speech, Labour leader Sir Keir Starmer said the cost of childcare was still a “huge challenge” for millions.

Source: bbc.co.uk

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