Child benefit cuts - what it means for you
CHILD benefit was cut for thousands of households today – and here we explain the changes that the Government has made.
Changes to the rules will reduce the entitlement of about 1.2 million families. Families where one parent is earning more than £50,000 a year will no longer be able to claim the total amount of child benefit. It is expected that couples disclose to each other whether they claim child benefit, or earn above £50,000 a year.
What are the changes?
The plan is to steadily withdraw child benefit from families where one parent earns more than £50,000. The benefit received will be recouped gradually as the income of the highest earning parent rises above £50,000, with the child benefit being taken away completely once their income is £60,000 or more.
How will it effect different families?
One income of less than £50,000: This family keeps the full child benefit, which for two children is £1,752 a year.
One income of more than £50,000: Can keep some benefit but must repay 1 per cent per £100 earned over £50,000. For someone earning £54,000, for example, the charge is £700.
Two incomes, both less than £50,000 each: Although the couple's joint income is over £50,000 they keep all their child benefit as neither one earns over the threshold.
Two incomes, one more than £60,000: Because one partner earns over £60,000 they must either stop claiming or repay the full £1,752 through a tax charge.
How will the Government get the money back from a family with one high earner?
If one of the parents earns more than £60,000, they can choose to stop claiming, or persuade their partner to do so.
If they continue to claim, the higher earner will have to admit this in a self-assessment tax form.
Then, HMRC will tax the high earner on the child benefit which they claim.