Child benefit cuts loom

Family|News|January 4th 2013

Next Monday – January 7 – sees the introduction of significant changes to child benefit payments.

Child benefit will remain universally payable but from Monday, higher earning families – in which one partner earns more than £50,000 per year – will have to pay back proportions of the benefit they receive on a sliding scale via additional tax, depending on their total income for the year. Families earning more than £60,000 per year will have to pay back all the benefit received.

Around one million families are thought to be affected by the new regulations. Of these, around 500,000 will need to complete to complete self-assessment tax forms in order to pay back the benefit.  Alternatively they can opt out of child benefit entirely but they will need to do so before Monday’s changes. According to a report in the Sunday Times, more than 150,000 couples have already done so.

The additional tax becomes payable as long as one partner in the household earns more than £50,000. According to MoneySavingExpert.com, a working couple could therefore earn a combined household income of £100,000 per year and still receive the full child benefit payments, as long as neither partner’s income exceeded £50,000. By contrast, a household in which one partner earned £60,001 a year and the other nothing would receive no child benefit.

Separated parents will lose all or part of their child benefit if a step parent or new partner living with them earns more than £50,000.

Affected families should have received letters from HM Revenue & Customs (HMRC) highlighting the changes and outlining how they will affect their payments. However, HMRC has admitted that only 784,000 people have received such letters to date, the Telegraph reports, leaving more than 300,000 people potentially unaware of the changes.

Photo by AgriLife  via Flickr under a Creative Commons licence

 

Author: Stowe Family Law

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Comments(4)

  1. Anthea Jaiteh says:

    I would like to make a comment – why households earning an income of £100,00 per year still receive the full child benefit payment, while other households who have one parent, who earns over £50,00 per year may be lose child beneift, i think that the system is not right!

  2. Yvie says:

    Perhaps the cut off point should be £50,000 irrespective of one or two incomes. Coming from the North of England, the average income is perhaps a lot lower, say £20.000-£25.000. They are the families who cant cut down on expenses as they struggle to pay their household bills.

  3. Sola says:

    @Anthea and @Yvie on the face of it, it looks unfair… Perhap you can look at it from another angle – it can serve as encouragment to both parents (whole household) to want ( go back) to work.

  4. Rob says:

    Discriminative and should be challenged in court. I will loose it all, but have had no letter or any other contact. Was very surprised and angry when this came out.

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