The High-Income Child Benefit Charge threshold will be raised from £50,000 to £60,000 and the taper will extend up to £80,000, Chancellor Jeremy Hunt has said.
The charge applies when an individual in a claimant household has an income above the threshold, after which they have to start paying back the benefit.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “The Child Benefit rules that penalised single parents were always incredibly unfair.
“It’s hard enough managing a household on a single income, without the system being stacked against you, so the decision to move to a household basis is a welcome change.
“The overall threshold for couples was raised too. After a decade of being rooted to the spot, it meant far more people were dragged into repaying this benefit – so that one in eight families faced this charge.
“This will be welcome, but there was scope for a bigger rise. If it had risen with average wages since it was introduced in January 2023, it would be £71,774. However, today’s change is a step in the right direction, and will still make a real difference to an awful lot of families.”
Financial journalist Martin Lewis previously called for the “unfair” charge to be reformed, sending a letter to the Chancellor to draw attention to the issue.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said of the charge: “This has been particularly unfair for single-income families because one parent earning above £50,000 currently faces the HICBC, but two parents earning £49,000 each escape it completely and receive their Child Benefit entitlement in full.
“Similarly, a couple where one partner earns just above £50,000 loses out against a family with a total gross income of £99,000.
“Increasing the clawback threshold from £50,000 to £60,000 and extending the top of the taper at which the benefit is withdrawn completely to £80,000 will mean 170,000 less people will be penalised.
“But the unfairness won’t end entirely until the benefit is based on the overall household income rather than that of the highest earner, something that is not going to happen for more than a year.”
Mr Hunt also annouced a new policy to help struggling families on Universal Credit in his Spring Budget.
The repayment period for Universal Credit advance loans will increase from 12 months to 24 months. The Household Support Fund is also to remain in place for another six months.
The Government also recommitted to its plans for working parents to get 30 hours of free childcare.
Benefit payments are going up 6.7 percent in April, including Universal Credit, PIP and Pension Credit payments.
Universal Credit payments will increase to:
- Single under 25: £311.68 (up from £292.11 per month)
- Single 25 or over: £393.45 (up from £368.74 per month)
- Joint claimants both under 25: £489.23 (up from £458.51 per month)
- Joint claimants, one or both 25 or over: £617.60 (up from £578.82 per month).
The Pension Credit income top-up will increase from £201.05 a week to £218.15 a week for single claimants, while the amount for couples will go up from £306.85 a week to £332.95 a week.
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