Child benefits
On 6th March 2024, the Chancellor of the Exchequer, Jeremy Hunt announced the budget for the year ahead. Within this statement he marked a huge win for parents in the high-income tax bracket.
As it stood, if one parent earned between £50,000 and £60,000, they would have to pay the high-income child benefit charge of 1% per £100 of income within that range if they claimed child benefit and once the parent hit £60,000, the charge would be 100%, effectively meaning they didn’t receive any child benefits.
This has long been branded as unfair since the threshold change in 2013, as if both parents in a household earned a combined income of £99,000 a year, at £49,500 each, they would be able to claim child benefits with no charge, whereas a single parent on £60,000 would receive nothing.
In his statement, Mr. Hunt announced that the system is to move to a household-based system by April 2026, however, in the immediate, from April 2024, the threshold for the charge would rise from £50,000 to £60,000 and the top of the taper where child benefit is withdrawn altogether would increase to £80,000 from £60,000.
What could this mean to me?
This means that if you earn between £50,000 to £60,000 you will no longer have to pay the charge and if you earn between £60,000 and £80,000 you will be entitled to claim child benefits if you wish.
Child benefit currently stands at £24 per week for an only child, or the eldest child with any following children being £15.90 per week, per child. For a family with one child, this is £1,248 per year or for a family with three children for example, this equates to £2,901.60 per year.
From 6th April 2024, the child benefit amount is increasing to £25.50 for an only or eldest child with additional children being £16.95 each. This takes the totals to £1331,20 for a single child household and £2,894 for a family with three children.
How many people will this impact?
The government are estimating that this change will result in around 485,000 families gaining an average of £1,260 in child benefit in the 2024/25 tax year.
Education provisions
Mr. Hunt further announced an initial £105m over the next four years to fund 15 new free schools specialising in special educational needs in order to create additional high-quality places and to increase choice for parents. The location of these provisions in not yet know but will be announced in May.
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The content of this Budget summary is intended for general information purposes only. While we believe this interpretation to be correct, it cannot be guaranteed and may be changed in the future. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor. The Financial Conduct Authority does not regulate tax advice.
