The maximum income threshold for people claiming child benefit will be raised from £60,000 to £80,000, it was announced today in the Spring Budget.
Jeremy Hunt said this was in the interim before a proposed change would see help for parents assessed on household income rather than individual income by 2026.
Giving his Spring statement, the Chancellor said that as changing the whole structure would not be a ‘quick fix’, the existing thresholds would simply be raised in the meantime.
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The threshold at which people begin to lose their entitlement will be raised from £50,000 to £60,000, while the top figure will increase by £20,000.
These thresholds have not moved since 2013, meaning wage inflation had seen many more people lose entitlement since then.
It comes after money saving expert Martin Lewis hit out at the ‘unfair’ policy as it currently stands, which penalises single parents and couples with one main earner.
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Mr Lewis responded: ‘WE GOT THE WIN ON CHILD BENEFIT!’
Mr Hunt said there would be a consultation on changing the structure of the benefit so it was assessed on family income, not individual income, with the aim of having the new system in place from April 2026.
‘Doing so requires significant reform to the tax system including allowing HMRC to collect household level information,’ he said, which is why he has also made interim changes in the short term.
He said that 170,000 more families would get child benefit in full.
And taking in the increased higher threshold too, he said the changes would mean ‘nearly half a million families with children will save an average of around £1,300 next year.’
Mr Hunt also insisted that the rollout of ‘free’ childcare hours was on track, pledging that childcare providers would receive a guaranteed rate for offering the service.
The money available from child benefit is significant, with people able to claim £25.60 per week (£1,248 per year) for the eldest child, and £16.95 per week (£827 per year) for each subsequent child.
It is available for any child under 16, or under 20 if they remain in education or training.
Critics pointed out that a family with two earners could have a household income of £100,000 and still get the full amount – but a single parent on £60,000 a year wouldn’t get anything at all.
Martin shared a question from a reader about Child Benefit before the Budget speech
‘My son’s partner tragically died 34 days after giving birth to twins. My son has taken a new job that now pays him £60,000 and is struggling with the cost of living and mortgage repayments after the loss of a second income.
‘HMRC has asked him to repay the Child Benefit. This seems grossly unfair that a couple can bring in nearly £100,000 but a single breadwinner loses out once they earn more than half of this. Are there any plans to change this?’
Likewise, someone earning £15,000 with a partner earning more than £60,000 would also not be entitled to anything, as the mechanism of deciding who gets the money is blunt and only looks at individual incomes.
Mr Lewis had said this issue was ‘by far the biggest’ thing his readers had asked him to push for ahead of the Spring Budget.
The Chancellor also announced a National Insurance cut for workers by another 2p from April 6, a new tax on vaping and a freeze on alcohol duty.
Alison Garnham, chief executive of the Child Poverty Action Group, said the child benefit change was ‘welcome’ but that the benefit had ‘lost 20% of its value since 2010 – an unforgiveable real-terms cut that hits kids in the lowest income families hard’.
She called for it to be increased by £20 a week, and said the two-child limit to Universal Credit should also be abolished.
Joe Lane, director of policy and campaigns at Action for Children, said: ‘Families with children are the group most likely to be in financial hardship and with no targeted package of support it was a wasted opportunity to provide help to the people who need it most.
‘The National Insurance cut along with the changes to Child Benefit mostly affects higher earners and whilst welcome, the short extension of the Household Support Fund is a temporary fix.
‘Further government action is needed to help break down the barriers faced by parents unable to work or already working full-time.’
Read our full round-up of what was said in the Commons this afternoon in our live blog here.
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