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Budget 2012: Child Benefit Withdrawn For Earners Over £50,000 To Avoid 'Cliff Edge'

Posted: 21/03/2012 13:46 Updated: 21/03/2012 14:31

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George Osborne

Child benefit will only be withdrawn if someone in the household earns over £50,000, the government announced today.

In his 2012 Budget Chancellor George Osborne said he wanted to avoid a "cliff-edge that means people lose all their Child Benefit when they earn just a pound more."

"So I can today confirm that instead of withdrawing child benefit all at once when people earn more than the higher rate threshold – the benefit will only be withdrawn when someone in the household has an income of more than £50,000," he said.

FULL BUDGET COVERAGE

"And the withdrawal will be gradual, 1% of child benefit for every extra £100 earned over £50,000 so there is no cliff-edge, and only those with an income of more than £60,000 lose all their child benefit."

The move is expected to help an extra 750,000 keep all or some of their child benefit. Nine out of 10 of families are still eligible for child benefit.

It comes after months of reports that Treasury officials were looking at raising the eligibility cut-off point amid fears of a backlash from middle-class voters.

Labour has also attempted to ramp up pressure on the issue by using an Opposition day debate in the House of Commons earlier this month to call for an urgent review of the reforms.

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Should it be #grandpatax instead of #grannytax?
@ guywalters : It's a #grandpatax as well you know

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5m set to lose out over #grannytax
@ joyless60 : #grannytax Dot Gibson gen sec of Nat pensioners convention 5m will be worse off. #bbcnewschannel Passionate advocate for pensioners

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Were @BBCNormanS's comments on the #grannytax a sign of BBC impartiality?
@ eljmayes : The BBC's Norman Smith has just stated that his mum wouldn't be impressed by the supposed #GrannyTax- bias towards Labour?

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@BBCNormanS gets personal on the #grannytax
@ CallumJonesBlog : @BBCNormanS on Treasury's follow up to #grannytax: "my mum won't be happy with that argument"

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If Osborne hadn't leaked - would #grannytax be so talked about?
@ anthonypainter : The irony is that by leaking everything else, the Coalition has focused attention on the #grannytax ! Genius. #budget2012

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CCHQ bring in help for defence over #grannytax
@ RicHolden : IoD: ‘This budget brings three items of good news for pensions’ http://t.co/gbouGq5y #Budget2012

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Should the LibDems put "yellow water" between themselves and the Tories on #grannytax?
@ MirrorJames : Top Lib Dems distancing themselves from 50p - should try putting some yellow water between themselves and the #grannytax #Budget2012

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Is Danny Alexander ashamed of the #grannytax?
@ 1957AJB : Danny Alexander ashamed of #grannytax http://t.co/gjwtNPEQ And so he should be

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Is the #grannytax fuss overblown?
@ gordoh : Personal view: #grannytax fuss is overblown. Hits some but impact modest. Too many reactions verging on hyperbole. #budget2012

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Is the #grannytax actually what it says?
@ faisalislam : Its not really a #grannytax though is it? The HMRC costing says 58% paid by male over-65s.

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GQ has collected the best #Budget2012 jokes, #grannytax not included.
@ AndrewPageCFP : RT @janemerrick23: Key about #grannytax Osborne has spectacularly failed Daily Mail Test by punishing readership: middle class pensioners

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Has Osborne angered the Daily Mail over the #grannytax?
@ AndrewPageCFP : RT @janemerrick23: Key about #grannytax Osborne has spectacularly failed Daily Mail Test by punishing readership: middle class pensioners

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Has George Osborne hid a second #grannytax in his Budget?
@ Simon_Nixon : Stamp duty hike is in fact another disguised #grannytax since it will be ultimately be paid by home sellers in form of lower house prices.

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What would the Queen have thought about the #grannytax?
@ jamiesont : Osborne lucky the #grannytax didn't leak yesterday or The Queen would have shoved his smug face through that stained glass window.

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Age UK have attacked the #grannytax
@ BBCNormanS : Age UK say pensioner with an income of 10500 pounds a year cd be 259 pounds a year worse off cos of #grannytax

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@TomWatsonMP isn't thinking of #grannytax, but the latest in #hacking and Rebekah Brooks
@ tom_watson : I'm distracted from #Budget2012 and #grannytax by news from a police station in Milton Keynes: http://t.co/P4uVL6x6

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#grannytax was one of the few things not to be leaked in the #budget2012
@ SimonBatchelor1 : Anybody surprised the only bit of the #budget2012 not to leak was the #grannytax No thought not #bbcbudget

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Why did Osborne do the #grannytax in his #Budget?
@ martinnicholls : Osborne's #grannytax own-goal is surprising given the number of Tory voters it'll piss off. Unusually clumsy bit of politics #budget

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@Johnprescott has made a #grannytax poster
@ johnprescott : My latest #giveitbackdave #grannytax poster - made here http://t.co/xHDefEFw http://t.co/uSWBa9ux

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The argument for the #grannytax?
@ jamesrbuk : Am thinking @helenlewis is right. Someone should write a defence of the #grannytax in relation to intergenerational justice etc.

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As #grannytax rivals Justin Bieber on Twitter, what will George Osborne do?
@ RichardJMurphy : Gordon Brown had his 10p tax fiasco and his 75p pension rise. Osborn tries to do both with his #grannytax charge on all new pensioners

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Will Osborne's team tackle the #grannytax furore?
@ martinnicholls : RT @edstaite: #grannytax is trending and not just with Lobby hacks. Osborne team need to hit back quick & hard #speedkills

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Will the LibDems do anything about the #grannytax?
@ PatJHennessy : Why didn't the LibDems raise a fuss about the #grannytax ?

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Isn't this why the #grannytax is controversial?
@ chrisshipitv : 230,000 pensioners will be brought INTO paying income tax. 360,000 OAPs lose £285/year. Did Treasury not think controversial? #grannytax

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Treasury source tells HuffPost on #grannytax...

"It's about simplification, it was never going to be an easy decision but it had to be done at some point."

The source says the furore was expected and planned for, but they insist that simplifying the personal allowance is in the public interest.

But expected or not, 4.5 million pensioners are going to be affected and it's rapidly becoming the story of the day.

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Westminster is abuzz with the news that the price of fags is set to go up.
@ FelicityParkes : I've just queued up with half a dozen people, all buying cigs like it was going out of fashion. Eat my smoke, Chancellor! #budget2012

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Labour's one-page Budget response

...is here on Twitpic (posted by Tim Montgomerie of ConHome)

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Gavin Shuker MP trials a potential attack line
@ gavinshuker : George Osborne's #grannytax means 4.5m pensioners will lose out. £3bn squeezed from over 65s over the next four years.

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Is this Osborne's big mistake?
@ ShippersUnbound : Could the #grannytax be Osborne's 10p fiasco? Discuss...

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Ros Altmann, Chief Exec of SAGA, blasts pension changes

She tells HuffPost:

“This is an outrageous assault on decent middle-class pensioners.

“This Budget contains an enormous stealth tax for older people. Over the next five years, pensioners with an income of between £10,000 and £24,000 will be paying an extra £3 billion in tax while richer pensioners are left unaffected.

“There is nothing in this Budget for savers, there is nothing to improve the annuity market, nothing to appease the damage of quantitative easing and nothing to support ISA changes and shelter older people’s money in cash. This Budget is terrible news for pensioners.”

“It is good to hear that we will be able to harness the power of pension funds to improve UK Infrastructure but in short, this Budget is another shocking example of the Government’s attack on poorer and older people. It is dramatically unfair.”

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FOLLOW UK POLITICS

Child benefit will only be withdrawn if someone in the household earns over £50,000, the government announced today. In his 2012 Budget Chancellor George Osborne said he wanted to avoid a "cliff-e...
Child benefit will only be withdrawn if someone in the household earns over £50,000, the government announced today. In his 2012 Budget Chancellor George Osborne said he wanted to avoid a "cliff-e...
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Read more from Huffington Post bloggers:
Richard Exell

Richard Exell: This Was Not a Robin Hood Budget - But the Sheriff of Nottingham Would Have Been Proud of it!

At the heart of today's Budget was the cut in the top rate of income tax to 45% from 2013. The arguments are set to run for days about how much this will cost; a lot depends on your opinion of what today's Budget Report calls a "behavioural response [that] has been larger than expected." Slashing tax for the richest will reduce their taxes by £3 million, but the government expects that this will be nearly balanced by a £2.9 million reduction in tax avoidance. Most progressives will have been astounded that a Chancellor who told us in his statement that "I regard tax evasion and - indeed - aggressive tax avoidance - as morally repugnant", then went on to reward it with his most controversial policy.

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karen1963yorks
My micro bio was empty. Good.
333 Fans
10:07 AM on 03/22/2012
Work hard Scrimp and save Get robbed.
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HUFFPOST SUPER USER
ccraiglamont
Sometimes funny, other times...not!
154 Fans
09:49 AM on 03/22/2012
Not being funny, but......... My wife and I waited until we could afford to have a child and cut our cloth accordingly. Neither of us earns over £20,000 before tax any year yet we manage well, with our son excelling in both his school work and sports. Why does anyone with an income of £50,000 NEED Child benefit? My wife gets about £20 a week which I must admit is nice, but that is the only benefit we get as a two parent working family. Over the past 20 years we have found ourselves being dragged into making decisions about what we have to sacrifice in able to give our boy all the attention and care he needs and we haven't had a proper holiday since he was born ,as we stagger our leave to care for him during the 7 weeks of Summer holidays, 2 weeks at Christmas and Easter and the numerous half terms and training days that Schools have. I firmly believe anyone earning over £25,000 has more than enough to survive on without receiving benefits as well.
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motoroes
10 Fans
08:21 PM on 03/21/2012
If you want children you pay for them. Why should everyone else pay? The level should be lowered to a pound.
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MsBubblyBlonde
Sassy,brassy,kiss my assy.
178 Fans
09:43 PM on 03/21/2012
I agree with you 100%.
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sherlock666
19 Fans
08:08 PM on 03/21/2012
I would scrap child benefit,if you cannot afford them, dont have them. I chose not to have kids, why am I paying for other peoples...they could then afford to pay a decent pension for those who have contributed all thier working lives into it..
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vectradt1
66 Fans
08:49 PM on 03/21/2012
So you will be relying on other peoples children to support and care for you in your old age?

I think I will object to my working sons paying for your pension and care.........

If you can't be bothered to have children don't expect others to look after you.......l
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MsBubblyBlonde
Sassy,brassy,kiss my assy.
178 Fans
09:41 PM on 03/21/2012
Why are other people children responsible for pensioners?Old people have worked long and hard for their pensions they don't need your kids to look after them.
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karen1963yorks
My micro bio was empty. Good.
333 Fans
10:09 AM on 03/22/2012
Your son does not pay my future pension. IF I even get a pension it will have been funded by about 50 years of me working and paying in.
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MsBubblyBlonde
Sassy,brassy,kiss my assy.
178 Fans
09:47 PM on 03/21/2012
I agree with you Sherlock.
. IF people choose to have children they should accept that children are expensive AND need funding for at least 18 years.The Government and the rest of the British public should not pay for anyone's children.
It doesn't take a mathametician to work out that IF you are poor then sadly you cannot afford to have children.Simple as that.
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vectradt1
66 Fans
11:27 PM on 03/21/2012
Of course you seem to forget that the most menial jobs are done by the off spring of poor families.......

You know the jobs Binman, road sweeper, etc but then again you would perhaps perfer to see migrants be brought in like back in the 1950's when Britain imported Afro-Caribbeans to do these jobs........
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Scully640
3 Fans
03:33 PM on 03/21/2012
I just wish that the chancellor and/or the treasury would set a budget that was fair to all instead of worrying about votes!
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vectradt1
66 Fans
08:50 PM on 03/21/2012
Which group of voters is he worrying about?
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horseguards
197 Fans
09:04 PM on 03/21/2012
Ex-pat voters?
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