Child Benefit calculator - see if you'll be better off after Budget announcement
Thousands of families can look forward to a financial boost under reforms to Child Benefit following a campaign by Martin Lewis.
Child Benefit is paid to anyone who is responsible for someone under the age of 16, or under the age of 20 if they are in approved education or training. In the current tax year it was worth £1,248 to households for the first child plus £826 for each additional child.
In the 2024/25 tax year starting from April 6, it will increase to £1,331 for the first child and £881 for additional children. Currently, Child Benefit is only paid in full to households where no parent earns over £50,000. Once either parent starts to earn over this amount, they have to pay back 1% of the Child Benefit for every £100 of income earned above £50,000 a year.
It means that once the highest salary in your household goes over £60,000 a year you are required to repay 100% of the Child Benefit as a tax charge, usually through a self-assessment in the January after the end of the tax year. This is called the High Income Child Benefit Charge and has been criticised as unfair because a couple who both earn £49,000 (a joint income of £98,000) keep the full amount of Child Benefit, while a single parent household earning £60,000 receives nothing after paying back the tax charge.
See how Child Benefit changes will affect you
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Under the new system, the lower limit will be lifted from £50,000 to £60,000 - which means any household where the highest earner is paid less than £60,000 will receive the full amount of Child Benefit. Once your salary goes over £60,000 you will start to incur the tax charge but it will increase at a lower rate, meaning your salary will have to be over £80,000 before the tax charge wipes out the full amount of Child Benefit, and it will no longer be worth claiming.
It is expected that 170,000 households will no longer pay the High Income Benefit Charge due to the change in the rules, which come into effect on April 6. You can now see exactly how the changes could affect your household with our interactive calculator. Chancellor Jeremy Hunt used his Budget speech yesterday to announce tax reforms for Child Benefit payments which will directly impact households.
The biggest winners will be those who earn between £59,000 and £61,000 - in that case a family with two children would see an extra £2,000 coming into their household finances in the next tax year. The reform has been claimed as a victory by MoneySavingExpert.com founder Martin Lewis who has campaigned for changes to the high income tax charges in the Child Benefit system. Speaking to his followers on Twitter (X), he said: “I’m very happy about this.”
.The Chancellor announced there will be a consultation in the next two years on further reforms to Child Benefit, in particular looking at whether it should be based on household income, rather than on individual income.
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