Budget: the Government will increase the income cutoff for child benefit
The Government will increase the threshold at which the high income child benefit charge starts to be charged from £50,000 to £60,000.
Transcript
00:00 Many of those families depend on child benefit, but the way we treat child benefit in the
00:08 tax system is confusing and unfair. It is a lifeline for many parents because it helps
00:16 with the additional costs associated with having children, and when it works it is good
00:20 for children, good for parents and good for the economy because it helps people into work.
00:25 But we currently withdraw child benefit when one parent earns over £50,000 a year. That
00:32 means two parents earning £49,000 a year receive the benefit in full, but a household
00:40 earning a lot less than that does not if just one parent earns over £50,000. Today I set
00:46 out plans to end that unfairness. Doing so requires significant reform to the tax system,
00:56 including allowing HMRC to collect household-level information. We will therefore consult on
01:01 moving the high-income child benefit charge to a household-based system, to be introduced
01:07 by April 2026. But because that is not a quick fix, I make two changes today to make the
01:17 current system fairer. Following representations from my right hon. Friends from Pennystone
01:22 and Stocksbridge, Harshalton and Wallington, Bassetlaw and West Worcestershire, along with
01:30 many others, I confirm that from this April the high-income child benefit charge threshold
01:37 will be raised from £50,000 to £60,000. We will raise the top of the taper at which
01:43 it is withdrawn to £80,000. That means no one earning under £60,000 will pay the charge,
01:51 taking 170,000 families out of paying it altogether. Because of the higher taper and threshold,
01:58 nearly half a million families with children will save an average of £1,300 next year.
02:06 According to the OBR, this change will see an increase in hours among those already working
02:13 to the equivalent of 10,000 more people entering the workforce. More investment, more jobs,
02:19 better public service and lower tax.
02:22 [Laughter]
02:23 [BLANK_AUDIO]