Budget: High Income Child Benefit Charge threshold increased from £50,000 to £60,000

[MidnightPatrol]

"Hunt says 500,00 families will gain almost £1,300 from increase in high income threshold for child benefit

Hunt says he will change the way child benefit is paid.

At the moment the high income threshold applies to individuals, not households. That will change, he says.

And he says he is also increasing the higher income threshold. It will go up from £50,000 to £60,000.

He claims that almost half a million families will gain by almost £1,300."

I don't think so because otherwise they've just increased the pool of eligible massively. It would mean you can still claim as long as joint household income is under £120k. That would be too big a jump in benefits surely.

I think it means they've upped the threshold from £50k to £60k for the highest earner (helps lots of people where the highest earner is in that bracket) but they are changing the rules to apply to the whole household to stop the current stupid situation where a single parent family earning £51k isn't entitled but a family earning £98k (2 x 49k) is entitled.

Of course this happens the only year it applies to us and I already opted out of my CB to avoid the self assessment hassle next year. Typical 😂

Sorry if I’ve missed it - I’ve tried looking but can’t see anything…can anyone tell me when it comes into effect? Is it from 5th(?) April this year?

No, he said

"We will therefore consult on moving the high-income child benefit charge to a household-based system to be introduced by April 2026.
But because that is not a quick fix, I make two changes today to make the current system fairer.
I confirm that from this April the high-income child benefit charge threshold will be raised from £50,000 to £60,000. We will raise the top of the taper at which it is withdrawn to £80,000."

They don't stop paying in unless you ask them to but for some that can have National Insurance implications when it comes to your pension.
We get it paid every 4 weeks or whatever it is, then once a year DH has to do a self assessment and pay it all back. (we put its straight into a savings account when we get it so we just send that back to them.

OK, so it is from next financial year. Bugger.

For it to be equitable, it shouldn't kick in for a single income household until after 98k. I can't see them reducing the threshold for dual income households, so how it tapers beyond the 98k will (I assume) be calculated in some (probably convoluted!) way that makes it akin to the dual income household.

We claim it, stash it in premium bonds and pay back via self assessment, in case we lose our jobs and can't back claim for that tax year.

There's now going to be a rush of claims for April ...

Some people have incurred hefty fines and stress not filling in a tax form to pay it back…. some women have not claimed it and then not gotten state pension credit for the years they stayed home to look after the DC. The whole thing is an utter shambles and should just be universal as it was in the Labour era. It will cost more to consult and administer on household than to just pay it to everyone who has DC. Especially if it only then excludes the top 2 per cent to make a political point. At what cost? Simplify it and just make it universal. All these stupid thresholds are confusing, lead to unwanted consequences and just keep HMRC in a job when they should be going after proper tax fraud and evasion.

Chances are the Tories won't be in power in 2026 so it will be Labours' mess to sort out (if they choose to).

It's good that the threshold has finally increased but I take the whole being based on household income with a pinch of salt.

In 2026 the Tories are highly unlikely to be in power so it's easy to make promises about what will happen in 2026 and blame it on Labour when it doesn't happen.

This has been a highly controversial policy since it was brought in. They have had years to change it after continuous feedback about how it's unfair and haven't in 10 odd years. So it's interesting timing.

We have been told its not possible to change so how come it suddenly is. I really doubt we'll ever see this come to fruition, cynic that I am.

So how it works is you claim child benefit and receive it throughout the year. Absolutely everyone (with children!) is entitled to claim it.

But, in October of the following tax year, you look back and realise "hey I actually earned £56k (or whatever) in adjusted net income* last year"...

*Adjusted net income for the employed is your gross income minus pension contributions and gift aid donations

And that means that you have to register for self assessment. You complete a self assessment tax return and this produces a figure for how much you owe to (or are owed by) the taxman. Child benefit is claimed back from you as the "child benefit tax charge" (a % of what you received in CB based on your adjusted net income over £50k). You then pay this by end of January in the tax year you filed for self assessment (so the tax year after you received the benefit).

If that sounds a bit complicated, it is! It means lots of middle earners filling in a self assessment who otherwise wouldn't need to. The small advantage of it being a tax charge I guess is it kind of functions as an interest free loan for 1+ year.

I crossed the threshold last year but can't afford to repay it in a lump sum this year, so I'm currently using CB to pay back my CB on a repayment plan...

I'm really confused , my husband earns over 50k and we stopped getting child benefit . I earn less than 10k.

Does this mean we can apply for child benefit if my husband salary is 60k or under ?

Yes. In fact, if it is currently under £60,000 you should still be claiming some of it.

You could already get some if your husband's income was less than £60k, but over £50k. But now (from April) you'll get the full amount if he earns under £60k, and you'll still get some if he earns between £60-80k.

You can still opt back in immediately, ahead of the change in April

Haha we just opted out as have always paid the whole lot back thanks to bonuses and self assesment is a pain, should get something now so best apply again!

Yes, if your husband earns less than 80k after pensions etc you will be able to claim it, at least partially, from April.

agree with a pp that it's a total shambles!

@NewYearResolutions @PuttingDownRoots

Thank you both. I am on the cusp and any variance in pay is likely going to tip me over so it's useful to know, because I had no idea! Never had to think about it before as I've never earned quite as much 😬

It sounds far more complicated than it should be that's for sure! I am glad I know about this now so I can prepare for my next pay rise as it may or may not put me just over the threshold.

Currently, its fully repayable at 60k. From 5 April this year, it won't become fully repayable until 80k.

I only opted out last week I haven't even received my confirmation letter yet! The online form let's you choose the date you want to restart so I'll probably do it through there for an April restart.

I doubt it will be at that high otherwise you go from 98k receiving some CB, full nursery funded hours and 40% tax to 100k where you receive no CB, no 30 funded nursery hours and pay 60% income tax.

It would make the 100k cliff edge even bigger than it is now and would result in plenty of people facing an effective marginal tax rate of over 100%.

The more I learn about this the more hair brained the whole thing seems! So you are over the threshold and need to pay it back, but to cancel it means you are penalised in pension? This whole thing is so bizarre!

I am now very much hoping my payrise kicks in after the raise up to 60k....

So if the household income thing comes in what will be threshold? Combined £60k? Not that I think it’ll come in to be fair