12 March 2024 , 20:49
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Martin Lewis has explained just how thousands of parents will be able to claim extra cash from April this year.
The Money Saving Expert (MSE) website founder returned to screens this evening for ITV's Martin Lewis Money Show. This week's episode focused on the Spring Budget and how what was announced was going to affect you.
Martin first congratulated viewers and gleefully shared that his MSE campaign had been successful and that the Chancellor announced major changes to Child Benefit in this year's budget. He said: "I had a private conversation with the Chancellor before the Budget last week about Child Benefit and about the Lifetime ISA. I then wrote a follow up letter as a third of all the questions I had was on Chlid Benefit, which is what tipped the balance and made him do it.
"So well done you, I was just amplifying your voices and it was the weight of your opinion that persuaded the Chancellor."
Martin explained that the High Income Child Benefit charge was introduced in April 2013 and under the current rules, you get Child Benefit if you are a parent - or responsible for a child - if you earn up to £50,000. If you earn over this, then you need to start paying part of it back and you will need to pay back 100% if you earn over £60,000 - meaning you don't get anything.
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However, the Budget changed this, Martin told viewers that the threshold for this will be increased for the first time since 2013 in April. Due to this threshold not rising over the last decade, Martin noted that more and more people were affected by it than ever before.
Martin said: "Here's how it will work. So you will start to lose Child Benefit once you earn £60,000. So once one parent earns £60,000, not the current £50,000 you will start to lose it and you will lose it completely once you earn £80,000, not the current £60,000 which will take a lot of people out of this system."
The Money Saving Expert warned that many parents opted out of getting Child Benefit due to the charges but they will need to "opt back in" in April to be able to get the payments. The changes could potentially benefit 485,000 higher earners and according to HMRC figures, around 180,000 people have "opted out" of the payments.
Martin then explained how the new system would work with the new thresholds. He said: "Take it with a pink of salt as it's too early to know and I haven't got final confirmation but almost certainly you'll lose 1% of Child Benefit for each £200 of income you earn over £60,000. Let me do that much more simply for you. It's a linear progression.
"So let's say you're earning £65,000, which is a quarter of the way through, you'll lose a quarter of your Child Benefit, if you're £70,000 or halfway through you'll lose a half of your Child Benefit. If you're at £75,000, so three-quarters the way through you'll lose three-quarters of your Child Benefit. That's how it works now and it will work the same way on the new system just over a bigger spread."
The Money Saving Expert also reiterated that the changes were only "going forward" so this means if parents owe High Income Child Benefit charges from previous years will have to pay it. He added: "It's very important for anyone now who's earning in these thresholds, you're going to have to pay it and if you're not doing it through self-assessment, declare it or they will come and chase you for it."