PARENTS

Child Benefit Cuts: How Will The Loss Of Benefits Affect You?

06/10/2010 14:11 | Updated 22 May 2015

What do the child benefit cuts mean for you?

Around one million families will be out of pocket when their child benefit is axed in three years time. Chancellor George Osborne announced plans to freeze child benefit rates for the next three years back in his June budget and now he's gone one step further abolishing payments for households where the main breadwinner earns over £44,000 a year.

As it stands right now anyone with children gets child benefit; regardless of where you live and what you earn. You get £20.30 a week for your first child and £13.40 for each, and every other one, so if you've got three kids that's £2,500 a year in extra cash to help with the family budget. Payments are usually paid monthly direct to your bank account until your kids are sixteen, or nineteen if they stay in full time education.

But the Government's now announced it's scrapping child benefit payments to higher rate taxpayers; those earning over £44,000 from 2013. But while payments like child tax credit are based on household income; these cuts will apply if either partner earns £44,000 or more.

Who loses?

The big losers will be households where there's only one income coming in but it tops the £44,000 limit; typically stay at home mums dependent on their partner's salary or single parents with a higher than average, but solo income, will see payments disappear too.

Who wins?

Dual income families if both partners earn under £44,000 stand to win. Say you both earn £43,000 a year; that's a healthy family income of £86,000 and you get to keep your child benefit.

Will I be affected?

Single parent family

As the sole breadwinner if your income tops £44,000 you'll lose child benefit.

Earn less and your payments are safe.

Two parent family; one income

Once again if the sole breadwinner brings home £44,000 or more you lose child benefit.

Two parent family – two incomes

If either of you earns £44,000 or more the benefit is stopped but if you're both within this limit you'll still get the payments.

Any way round this?

If you're on the cusp of that £44,000 limit you can use tax loopholes to protect your benefit. Richard Morgan from Vebnet, which specialises in workplace benefits, says 'salary sacrifice' schemes where you 'swap' a slice of salary for benefits like childcare vouchers or private medical insurance means on paper your 'income' is lower so you could still qualify for child benefit.

Another option is to increase your pension payments. Paying more into your pension pot could reduce your 'taxable' income so you keep your child benefit.

To sweeten the financial blow the Government has hinted at plans for a possible 'tax break' for married couples by 2015 although no further details have yet been announced.

What other child friendly benefits can I still get?

Child Tax Credit Paid to anyone bringing up children earning under £58,000 a year (£66,000 if you have a child under one). The basic rate is £545 a year but may be higher depending on your income. Go to www.direct.gov.uk for more information on how to apply.

Health In Pregnancy Grant For women who are twenty five weeks pregnant or more and on heath advice from their midwife - a one off tax free payment of £190 but this will be abolished from next year. Go to www.direct.gov.uk or call 0845 366 7885.

Sure Start Maternity Grant For low income expectant mums a one off £500 payment. Again, go to www.direct.gov.uk.

Healthy Start Vouchers & Vitamins Vouchers for free milk, fresh fruit and vegetables worth £160 a year. Visit www.healthystart.nhs.uk or call 0845 607 6823.

Child Trust Fund This too was drastically reduced by Government cut backs – children born before the end of the year will get a one off £50 payment. Go to www.childtrustfund.gov.uk to find out more.

What do you think about child benefit being cut?

For many of us it's a lifeline, the only benefit we may get from the Government.

Do you agree or do you think if cuts have to be made, cutting child benefit is the obvious place?

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