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Chancellor Rachel Reeves has defied calls to reform child benefit and alter the way in which it’s calculated – which cash knowledgeable Martin Lewis branded “bad news” for single-earner households.
Child benefit will proceed to be primarily based on particular person revenue somewhat than family revenue, which means anybody incomes £60,000 or extra earlier than tax every year should pay a high-income cost above that threshold.
In a pair the place they each earn £60,000 or extra, whoever earns probably the most should pay the cost – regardless of who claims child benefit.
Child benefit is withdrawn if the revenue of the higher-earning companion reaches £80,000 a yr.
The system has been branded “unfair” as a result of if each mother and father earn beneath £60,000 they will preserve all of the child benefit, but when anybody earns over – whether or not single or in a pair – they face the cost.
Parents claimed it might even limit individuals’s profession selections as a result of they wished to keep beneath the earnings restrict.
Mr Lewis wrote on social media: “This is a shame and leaves inequity rife, bad news for single parent and single-earner families.”
He instructed BBC Radio 5 Live: “I’m very disappointed. I don’t like unfairness. The way our child benefit is paid is unfair to single parents and single-earner families.”
He mentioned he had campaigned for a change, however Ms Reeves’s determination not to make the change was embedded in background paperwork produced for the Budget.
Former Conservative chancellor Jeremy Hunt introduced new interim guidelines in his 2024 spring Budget to base the cost on family revenue as an alternative of the very best earner, however the change was by no means carried out.
Wednesday’s Budget doc acknowledged: “The government will not proceed with the reform to base the high-income child benefit charge on household incomes.
“This is because it would have come at a significant fiscal cost of £1.4 billion by 2029-30 if setting the threshold to £120,000-£160,000, where no families would lose out.”
One dad or mum instructed Mr Lewis: “I’m a sole income of 50k+ and I have to pay tax on my child benefits. Next door earn 85k across two incomes and don’t pay tax. How is this fair?”
Chief secretary to the Treasury Darren Jones confirmed in a written assertion that child benefit charges would rise throughout the UK from April, in keeping with CPI.
This will convey the speed for the eldest child to £26.05 per week, from £25.60, and for different kids to £17.25 per week from £16.95.
As anticipated, Ms Reeves additionally didn’t scrap the much-criticised two-child benefit cap.
The Budget additionally elevated the speed of nationwide insurance coverage employers pay from 13.8 per cent to 15 per cent, and the beginning threshold is being diminished to £5,000 kilos a yr from £9,100 as it’s now. Smaller employers could have their allowance raised to £10,500.
Mr Lewis mentioned whereas it was not a direct value to workers, the upper nationwide insurance coverage “probably will have some knock-on effect with consumers and workers in the future”.
The Budget paperwork additionally revealed the chancellor has not prolonged the tax aid for first-time property patrons.
The aid for these shopping for their first dwelling had been set at £425,000 on a short lived foundation in 2022, however from April subsequent yr, the nil charge band will revert to £125,000, so an additional 20 per cent of first-time patrons could have to pay extra in stamp responsibility, in accordance to consultants.
Mr Lewis additionally warned anybody on the minimal wage to guarantee they had been getting the complete rise subsequent yr.
He mentioned: “There are reasons you might not be getting the full minimum wage. They might not be factoring in the cost of your uniform. They might not be including all your work hours.”
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