Child Benefit - confused?
Up until now, most families in the UK received Child Benefit regardless of what they earn. Now, as proposed by George Osborne and Prime Minister David Cameron, Child benefit as a universal payment to all will be withdrawn for all higher-rate taxpayers from 2013.
This has sparked huge controversy as many parents say they won’t be able to cope financially without their Child Benefit money. In fact many parents have said they would be better off divorced.
The main complaint seems to be that the cuts will mainly affect parents where there is only one breadwinner, compared to families where both parents work. This is because instead of means testing families, or looking at joint income, Child Benefit will be cut from households with a single higher-rate taxpayer.
Mr Cameron said today that the Government would, ‘obviously listen to those suggesting that it should be looking at families’ total income…' But he said this would mean introducing a means-testing system which would be ‘incredibly bureaucratic and expensive, and frankly, quite intrusive.’
‘Under this change, child benefit will go on being paid to the 85 per cent of people who don’t pay top-rate tax, and I think that is fair and right’.
He did go on to suggest that there will be other measures put in place to help stay-at-home mums, for instance some sort of transferable tax allowance.
So what will this mean for you?
Any couple with one earner paid more than the £44,000 higher-rate tax threshold will lose their child benefit.
But, two working parents who earn just under the higher-rate tax threshold could earn £80,000 a year and keep child benefit, whilst the household with just one income of £45,000 would lose theirs.
How much is child benefit worth per year?
For one child you receive = £1,056
For two children you receive = £1,752
For three children you receive = £2,449
For four children you receive = £3,146
For five children you receive = £3,843
At the moment 7.8 million families receive child benefit in the Uk but the Government hope to save one billion with these proposed cuts. Mr Osborne also revealed the total state benefits one family can claim in future will be capped at about £26,000. This would mean that no family on welfare would be better off than a family earning an average income from working. The changes proposed by My Osbourne are planned to take place in 2013, so make the most of your current child benefit until then!
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