The threshold at which parents are charged for receiving child benefit is to rise from £50,000 to £60,000, chancellor Jeremy Hunt announced in the Budget today (6 March).
The top of the taper at which the benefit is withdrawn altogether will also rise to £80,000.
These thresholds had not previously changed since the policy was introduced by George Osborne in 2013, despite the soaring cost of living.
However, the Chancellor acknowledged in January that the child-benefit rules may be unfair and in need of reform.
Currently, claimants who earn more than £50,000 lose some of their family’s child benefit. However, a family where two parents jointly earn more than £50,000 still receives the full amount.
Over the £50,000 earning threshold, your childcare benefit starts being gradually withdrawn. Those earning over £60,000 don’t receive any at all.
Today’s announcement means that the lower threshold rises to £60,000, while the point at which the benefit is withdrawn rises to £80,000.
Child benefit is paid to families in the UK with children under the age of 16, or under 20 if they are still in full-time education or training .
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.
As well as today’s changes, Hunt has also announced he will consult on making the benefit to apply to collective household income, rather than on an individual basis.
He said he would introduce this by April 2026.
Shaun Moore, tax and financial planning expert at Quilter, said: “The cost of living in the UK has surged notably since the high-income Child Benefit threshold was created in 2013, and the current ‘high income cap’ of £50,000 has ensnared even some basic-rate taxpayers. It is therefore positive that the Chancellor has announced the threshold will rise to £60,000, and the Child Benefit taper level has been increased from £60,000 to £80,000.
“Using the Bank of England’s inflation calculator this threshold should be £66,727 today, so though this increase is welcome, it still somewhat overlooks the impact of inflation over the past decade. Increasing the threshold is a step in the right direction, and we are pleased to hear that the government will fundamentally reevaluate how household income is considered in the eligibility criteria for Child Benefit to reduce unfairness baked into the system.”
Alastair Black, head of savings policy at abrdn, added: “Advisers actively create strategies built around the thresholds to optimise the benefits that clients receive.
“Today’s announcement means many strategies will need to be revisited, at least as far as these parts go. But this was always going to remain an area of potential change, so hopefully advisers and their clients can now plan ahead with confidence – although we’ll need to see details of the consultation of the household system and the outcome for the future to be set.
“Further, advisers will be able to help those in the new bands retain child benefit through effective use of pension contributions – a key part of financial advice”
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