Yahoo Finance Income cap on child benefit to rise, Hunt announces in budget speech
Chancellor Jeremy Hunt upped the threshold at which earners are no longer eligible for child benefits in his spring budget on Wednesday, increasing the cap by £10,000 and laying out a path to change the way it is assessed.
The high income child benefit charge (HICBC) is a tax charge that applies to higher earners who receive child benefit, or whose partner receives it.
Under current policies, child benefit is withdrawn when one parent earns more than £50,000 a year.
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From this April the high-income child benefit charge threshold will be raised from £50,000 to £60,000.
He also committed to consulting on moving the high-income child benefit charge to a household-based system to be introduced by April 2026.
In addition, the rate at which the HICBC is charged will also be halved from 1% of the child benefit payment for every additional £100 earned above the threshold, to 1% for every £200. This means child benefit will not be withdrawn in full until individuals earn £80,000 or higher.
“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," Hunt said.
IFS director Paul Johnson called the change "radical."
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"This doubles period over which taper works so cuts marginal tax rates," he tweeted.
“The unfairness won’t end entirely until the benefit is based on the overall household income rather than that of the highest earner, something that is not going to happen for more than a year," said Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners.
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