Citywire for Financial Professionals
Share this page:
Stay connected:

Citywire printed articles sponsored by:

View the article online at

Child benefit changes: how will you be affected?

Cuts to child benefit come into effect on Monday but it's not just the wealthy who will suffer.


by Michelle McGagh on Jan 04, 2013 at 15:52

Child benefit changes: how will you be affected?

Over one million families will find themselves worse off from Monday as the government implements its child benefit cuts, and it’s not just high earners who need to watch out.

The ‘squeezed middle’ will be even more squeezed as of 7 January as 1.1 million families see their child benefit cut. Currently 800,000 letters have been sent out by HM Revenue & Customs warning families that they will face a cut in benefits but another 300,000 have been left in the dark.

Will I lose my benefit?

At present every family is entitled to £20.30 a week for the first child and £13.40 for subsequent children, regardless of earnings.

However, under the new rules families where one parent earns between £50,000 and £60,000 will be affected. The child benefit will be reduced on a sliding scale between £50,000 and £60,000, when the family will lose the benefit completely.

To be precise, for every £100 over £50,000 that you earn you lose 1% of your child benefit.

For a family with one parent earning £60,000 a year that has three children, this cut will amount to around £2,450 a year.

What if we earn £60,000 a year combined?

This is an anomaly in the system. If one parent earns £60,000 a year and the other stays at home to look after the children then all child benefit is stopped.

But, if both parents earn £49,000 a year, a combined £98,000 a year total, then they get to keep their child benefit.

This ‘cliff edge’ nature of the cut has been the biggest bone of contention but the only other alternative is to means-test families, which is complex and costly.

Does the benefit just stop?

No, the benefit will not just stop or be reduced because you no longer qualify for the full amount.

Parents earning between £50,000 and £60,000 will have to decide whether it is best to write to HM Revenue & Customs to give up the benefit or continue taking the full amount and pay back the difference at the end of the year.

If you do decide to take the benefit and pay back what you owe at the end of the tax year you must do so through a self-assessment form. If you do not fill out the form you could be fined £100.

Sign in / register to view full article on one page

2 comments so far. Why not have your say?

Ian Lewthwaite

Jan 08, 2013 at 10:18

The politicians go on about supporting the family unit, all talk and NO ACTION.

But tax wise they destroy Marriage with the stupid tax rules introduced about 1990. where individuals have their own PA with no regard or consideration of enabling the couple, who may have only one breadwinner whilst the children are still at home to 16, to utilise the unused portion of the PA of the other "partner/wife or whatever, who will because of circumstancesof choice( or nature) stay at home and have little or no taxable earningsto claim against their Personal Allowance.

Who was the dumb clut who changed the rules for WORKING people as opposed to salaried, they must have beeneither two brain cells short of a dozen, or biased homosexuals- why else was it changed other than the HMRC couldn't manage ( and still can't) so why change something that worked

report this


Jan 08, 2013 at 12:27

Contrary to your article, as I understand it, an individual does not have to be a parent in order that his/her salary is a determining factor. For example the salary of either of two unmarried persons living in the same house is the determinant if such persons may be defined as 'an entity' whatever that is!. This is a badly thought out, deficient law which apart from the anomaly mentioned that two parties each earning £49K retain their allowance, in the case of 'an entity' it takes no account that one may be the parent of children living with an estranged former partner and paying substantial child maintenance while the new 'other half' of 'the entity' may be a low or nil earner and supporting children of their own. Thus a salary of £60K before tax/allowances/ new mortgage/ child maintenance cannot be described as denoting wealth. A fairer way woul have been to use the post tax/expenses income as the determinant or restrict the scheme to married couples.

Those most affected, by definition are hard working, modestly achieving, young persons, often struggling to rebuild a 'normal ' life often after separation. These are the very 'strivers ' which the coalition purports to support what hypocrisy! They are just an easy target satisfying the distorted ideologies of the Lib Dems and unaffecting the mega earning Tory acolytes.

Much is made of the modest cuts being made by this government on the so called poor and on highly inefficient local authorities and their highly remunerated management and councillors but no cuts are so vicious as to

remove at one fell swoop £1056 for a parent with one child. The Coalition will lose considerable votes from this wrong measure. it will beinterested to hear whether Labour will retain it.

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

Sponsored By:

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add to your safe senders list so we don't get junked.

Latest from Investment Basics

See all headlines

Sorry, this link is not
quite ready yet