By Jennie Brown, Tax Partner
What has previously been thought to be an unfair system, with eligibility for Child Benefit being withdrawn when one parent earns more than £50,000, now sees a welcome change.
Currently, if one partner earns more than £50,000, child benefit starts to be gradually withdrawn, and where the individual earns more than £60,000, they do not receive child benefit at all.
The harsh reality of the current rules are that two parents that earn £49,000 a year each would receive child benefit in full. Comparing this with a household with one working parent or a single-income household earning more than £50,000 that would see the benefit cut.
The proposed changes are to provide some immediate relief for families. The changes see the lower threshold whereby Child Benefit starts to be tapered, increased from £50,000 to £60,000. Additionally, the upper threshold, that which where exceeded Child Benefit is lost in full, increased from £60,000 to £80,000, from April 2024.
The changes are thought to take 170,000 families out of paying the child benefit charge.
In addition there is now to be a consultation with wider scale plans to change the system altogether.
The plan being by April 2026, is that child benefit eligibility will be based on household income and not that of individuals.
