No more child benefit if you earn £44,000

4 October 2010

Child benefit will be scrapped for higher-rate taxpayers from 2013, the Chancellor George Osborne announced today.

He said that the cuts – which will hit anyone earning more than £44,000 a year – would boost the Treasury's coffers by around £1 billion a year.

"It's not a decision we've taken lightly, said the Chancellor.

"But it's very hard to justify taxing people on much lower incomes in order to pay the child benefit to some of the better off in our society. It means we are all in this together. Each part of society is going to be making a contribution."

But inevitably, the plans have come under fire. Critics have particularly focused on the fact that the threshold for scrapping the benefit will be based on one person's salary exceeding £44,000.

However, if two parents earned say £33,000 each, creating a joint household income of £66,000, they would still qualify for child benefit.

The chancellor said that this was the most straightforward option and would avoid the requirement for means testing.

Currently, child benefit is paid to parents with any children under the age of 16 – or age 19 if they are in full-time education.

The benefit is worth £20.30 a week for the first child and £13.40 a week for any other children. This means a mother of three will receive around £2,500 a year.

Currently, child benefit is paid to 7.7 million families with children, costing about £12 billion a year and it is estimated the change will affect about 1.2 million families.

The funds freed up will help fund the Tory's plans for a one single welfare benefit that will cover tax credits as well other benefits including housing benefit, Jobseeker's Allowance and council tax benefit.

"There will be no cut for its own sake, but instead savings to secure our future," the chancellor said.

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