Jeremy Hunt lifts child benefit charge threshold in Budget surprise

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The high-income child benefit charge threshold can be raised from £50,000 to £60,000 and the taper will lengthen as much as £80,000, Jeremy Hunt has mentioned.

In a surprise announcement throughout Wednesday’s Budget, the chancellor mentioned the threshold will rise from April, lifting 170,000 households out of paying the prices altogether.

Currently, when you earn £50,000 or extra earlier than tax annually you may nonetheless declare child benefit, however it’s a must to begin paying a “child benefit tax charge” above that threshold.

If you reside with a companion and also you each earn £50,000 or extra, whoever earns probably the most must pay the tax charge – irrespective of who makes the declare for child benefit.

If you earn over £60,000, the quantity you pay in prices will cancel out the quantity you achieve in child advantages.

It has been criticised as unfair as a result of if each dad and mom earn underneath £50,000 they will preserve all of their child benefit, whereas if one earns over, they’re hit with the fees.

Meanwhile the Institute for Fiscal Studies (IFS) has mentioned dad and mom hit by the charge who earn between £50,000 and £60,000 have efficient tax charges for earnings tax and nationwide insurance coverage of 54 per cent for one child, 63 per cent for 2 kids and 71 per cent for 3 kids.

Chancellor Jeremy Hunt mentioned child benefit is withdrawn when one guardian earns greater than £50,000 a yr, saying: “That means two parents earning £49,000 a year receive the benefit in full but a household earning a lot less than that does not if just one parent earns over £50,000.

“Today I set out plans to end that unfairness. Doing so requires significant reform to the tax system including allowing HMRC to collect household level information.

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

“But because that is not a quick fix, I make two changes today to make the current system fairer.”

He defined: “I confirm that from this April the high-income child benefit charge threshold will be raised from £50,000 to £60,000. We will raise the top of the taper at which it is withdrawn to £80,000.

“That means no one earning under £60,000 will pay the charge, taking 170,000 families out of paying it altogether. And because of the higher taper and threshold, nearly half a million families with children will save an average of around £1,300 next year.”

Mr Hunt additionally promised that top earnings child benefit prices can be administered on a family somewhat than a person foundation by April 2026, with a session to start “in due course”.