Budget 2012: Some high earners cling onto child benefits

Published by Johanna Gornitzki on 21 March 2012.
Last updated on 21 March 2012

Mother and child

People earning just above the higher-rate threshold will not lose the child benefit when it's scrapped for higher earners in April 2013, Chancellor George Osborne has announced.

Instead, it will be phased out when someone in a household has an income of more than £50,000 - falling by 1% for every £100 earned over £50,000 - it was revealed in the Budget today.

Only household with one person earning more than £60,000 will lose child benefit entirely.

The Chancellor said the new system would prevent "a cliff edge effect".

The news will come as a great relief for those parents earning just above the higher-rate tax threshold, as the government previously had announced plans to scrap it for all households with one higher-rate taxpayer.

However, it will still be unfair for households in which only one parent works, as it's not the combined income that will be taken into account but it will affect any family with one parent above the threshold.

This means a family with one stay-at-home parent and one parent earning £60,000 will not receive any child benefit, while a family with two parents both on an income of £40,000 each – a total of £80,000 – will still get it.

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