What The Child Benefit Changes Mean To You
Child Benefit is changing. A million households will receive a letter in November 2012 telling them that they are set to lose some or all of their Child Benefit as part of the government’s efforts to cut the deficit.
Our easy to use guide explains everything you need to know about these Child Benefit changes.
What are the changes?
In November 2012, you will receive a letter if you earn more than £50,000 and you live at an address where child benefit is received. This letter will explain how your family is likely to be affected.
The letter says:
“If these changes apply to you or your partner, you should jointly decide whether to:
stop getting child benefit from 7 January 2013, and avoid the new charge, or
keep getting child benefit after this date and declare the payments for income tax purposes”
Child benefit currently stands at £20.30 a week for the first child and £13.40 for each child after that.
Families where one parent earns between £50,000 and £60,000 will have their benefit reduced on a sliding scale, and will only lose the benefit entirely when earning over £60,000.
Child Benefit in Numbers
7.9 million - number of families claiming Child Benefit
13.7 million - children being claimed for
£50,000 - Your Child Benefit will start to reduce if you earn over this amount
1.2 million - people affected by the changes
£20.30 - weekly child benefit for your first child
£13.40 - weekly child benefit for each other child
£60,000 - Your Child Benefit will stop if you earn over this amount
£4,000 - Equivalent pay cut of losing Child Benefit for 3 children
7th January 2013 - Date the changes come into effect
500,000 - additional people who will have to complete a tax return
82 - percentage of people in a poll who supported the cut
Complicated changes could see you having to complete a tax return
The changes to child benefit are complicated. The BBC reports that families earning more than £60,000 have two options. You can:
Choose to give up the benefit entirely
Have it clawed back through your tax return
Alex Henderson, a tax partner from PwC, the accountants, said: “HMRC’s helpline is likely to be pretty busy. In the new year there is likely to be a flood of further queries as people begin to deal with self-assessed tax returns or tax codings to claw back the benefit. Given the timing issues, and the complexity and novelty of these changes, there could well be pinch points for HMRC and consequent delays in responses.”
Will you be affected by the Child Benefit changes? Share your thoughts below.
I earn £65,000 but my wife doesn’t work. We have three children so are set to lose all our Child Benefit. I don’t understand how two married people earning £48,000 each get to keep their Child Benefit when we lose all ours.
Derek – There are some anomalies in the new regime. Nick Clegg, the Deputy Prime Minister, has himself admitted that many of the families who would lose out were “people who do not feel wealthy”.