HUGE child benefit changes kicking in next week, and they’ll save hundreds of thousands of parents £1,300 a year.
Earlier this month the Chancellor outlined reforms to the high-income child benefit charge in a big boost for mums and dads.
GettyHuge child benefit changes kicking in next week[/caption]
The change to the child benefit threshold will happen in April
These changes will come in from April 6.
Child benefit is paid to parents to help with the costs of childcare.
From next month, parents can claim £25.60 per week for their first or only child and an extra £16.95 a week for any additional children.
But, as it stands, 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.
Jeremy Hunt confirmed in his Spring Budget that from next Saturday, the threshold at which parents have to pay the charge will be increased to £60,000.
It means that parents will repay 1% for every £200 of income earned over the new threshold.
Furthermore, currently, when you reach a £60,000 salary, you have to repay the full amount of child benefit received.
From April 6 though, the Chancellor announced this limit will go up to £80,000 to ensure fewer parents are caught out.
Because of the higher taper and threshold, nearly half a million families with children will save an average of £1,260 next year.
What other child benefit changes are on the way?
Also at the Spring Budget, the Chancellor acknowledged that the existing child benefit system could be “confusing and unfair” because of how single parents are affected.
So, in a further boost, Mr Hunt said the government will look to change the system to a household-based one by April 2026.
Currently, child benefit begins being withdrawn when one parent earns over £50,000 a year.
This means two parents earning £49,000 a year – totalling £98,000 in the household – each receive the benefit in full.
Whereas a household earning a lot less than that does not get the full payment if just one of the parents earns over £50,000.
By converting to a household-based system, it would mean parents aren’t caught in the tax trap unnecessarily.
But this change will take time as they are complicated measures and an exact timeline hasn’t been announced.
Child benefit
Everything to know about child benefit:
How much is child benefit and when does it stop?
How long does child benefit take to claim and is it means-tested?
What age do child benefits stop and can I claim for a third child?
Are child benefit payments going up and how much more will I get?
What is the high-income child benefit charge?
At the moment, 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.
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.
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].
Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories
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