PARENTS are set to make huge savings following a big change to child benefit – but by how much will depend on your circumstances.
The Government will increase the threshold at which the high income child benefit charge starts to be charged from £50,000 to £60,000, from April.
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This means around 170,000 families will be taken out of paying the charge.
The Chancellor Jeremy Hunt unveiled the reform in the Spring Budget.
Child benefit is paid to parents to help with the costs of childcare.
Currently, parents can claim £24 per week for their first or only child and an extra £15.90 a week for any additional children.
Spring Budget at a glance
But if either parent or carer starts earning over £50,000, they have to start paying the high-income child benefit charge.
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This means you have to pay back 1% of your child benefit for every £100 of income earned over the £50,000 threshold.
The Chancellor today confirmed that from April the threshold at which parents have to pay the charge will be increased to £60,000.
The rate at which the fee 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.
As it stands, when you reach a £60,000 salary, you have to repay the full amount of child benefit received.
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From April, though, The Chancellor announced this will go up to £80,000 to ensure fewer parents are caught out.
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Overall, the Government estimates that 485,000 families will gain an average of £1,260 towards the costs of raising their children in 2024/25 and that 170,000 families will be taken out of paying the tax charge.
If you are wondering how much you will benefit from the change, the government has its own calculator.
It will help you work out how much you might have to pay back if you’re hit with the high income child benefit charge too.
You can find it on the the gov.uk website here.
Once you’ve clicked through it will ask you a series of questions to determine how much you are entitled to.
It is yet to be updated following Jeremy Hunt’s announcement and The Sun has asked the DWP when it expects this to be done.
Child benefit calculator
How much you are set to gain in April will depend on your annual income, and there is a way to work this out.
Someone with one child, for example receives £24 a week, or £1,248 a year.
You will then need to work out how far over the threshold you are – so if you earn £65,000, that’s £5,000.
You will then need to divide that that by £200 – the amount you’ll lose for every 1% you earn over the £60,000 threshold.
So in this example, £5,000 divided by £200 is 25.
This then means you will lose 25% if your child benefit.
The final step is to work out what that means for you.
If you have one child, that’s 25% of £1,248, which is £312 – this the amount that you will have to repay.
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What is the high-income child benefit charge?
If either parent or carer starts earning over £50,000, they have to start paying the high-income child benefit charge.
This means you have to pay back 1% of your child benefit for every £100 of income earned over the £50,000 threshold.
Once you reach £60,000 of yearly income you have to repay the full amount of child benefit received.
Parents have been caught out by the complicated rules and extra charges and landed with bills for thousands of pounds.
It’s up to parents to notify HMRC if they are liable for the charge and they must file a self-assessment tax return to pay it.
Child benefit
Everything to know about child benefit:
What is child benefit and who is eligible?
Child benefit is paid to parents to help with the costs of childcare.
Payments are usually made every four weeks, plus by claiming child benefit you also get National Insurance credits that count towards your State Pension.
Currently, parents can claim £24 per week for their first or only child – £96 a month and £1,248 a year.
But, from April the rate for your eldest or only child will go up to £25.60 a week – equating to around £102.40 a month or £1,334.86 a year.
For any additional children, they can claim an extra £15.90 a week per child – £63.60 a month and £826.80 a year.
And, from April for every other child, you’ll get £16.95 a week, which is £67.80 a month and £883.82 per year.
You normally qualify for child benefit if you live in the UK and are responsible for a child under 16.
Parents can also claim support for a child under 20 if they are in approved education or training.
When two or more people share the responsibility of caring for a child, it can only be claimed by one person.
You’ll be responsible for a child if you live with them or you are paying at least the same amount as child benefit towards looking after them.
This might mean you are paying the equivalent amount of child benefit on food, clothes or pocket money.
You should bear in mind, eligibility changes if a child goes into hospital or care and if your child starts to live with someone else.
Usually, you get child benefit for eight weeks after your child goes to live with a friend or relative – as long as they don’t make a claim.
But it can continue for longer if you make contributions to your child’s upkeep.
Foster parents can also claim child benefit, as long as the council is not paying anything towards their accommodation or maintenance.
Legal guardians or parents adopting a child can also apply for the benefit, but the child has to be living with them.
You will only be able to claim for a short period if you leave the UK, for example, if you go on holiday or for medical treatment.
For anyone not sure about eligibility, you can contact the Child Benefit Office.
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Meanwhile, here are four ways to avoid the child benefit tax trap – but still gain £1,248 a year in free cash.
Plus, here are 17 big money changes in 2024 and what they mean for you – including a £1,800 pay rise for millions and free childcare.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected].
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