Chancellor Jeremy Hunt announced the budget on Wednesday, marking a ‘huge win’ for those seeking child benefits.
The change means parents will be allowed to earn more money before they have to start repaying child benefit. Currently the threshold for child benefit is £50,000.
This means that if either parent is earning over £50,000 before tax they would need to pay the High Income Child Benefit Charge. It meant that those earning £60,000 would pay back more in tax than they would be receiving child benefits.
The charge has been criticised in the past because it means that if both parent earn under £50,000 they do not have to pay any tax on child benefit. But if one person earns £60,000 they will be charged.
However, with Mr Hunt’s latest announcement it means this threshold will now go up to £60,000.
Mr Hunt noted in his speech: “Two parents earning £49,000 a year receive the benefit in full but a household earning a lot less than that does not if just one parent earns over £50,000.
“Today I set out plans to end that unfairness. Doing so requires significant reform to the tax system including allowing HMRC to collect household level information.
“We will therefore consult on moving the high-income child benefit charge to a household-based system to be introduced by April 2026.
“But because that is not a quick fix, I make two changes today to make the current system fairer.”
He added: “I confirm that from this April the high-income child benefit charge threshold will be raised from £50,000 to £60,000. We will raise the top of the taper at which it is withdrawn to £80,000.”
Alongside this, the Martin Lewis explained how the latest change will impact parents.
On social media blogging site X he said: “WE GOT THE WIN ON CHILD BENEFIT! Chancellor tipped me off before budget, said this was due in large to MSE/my shows campaigning all based on all those of your who messaged me to say it was the key thing to put to him.
“So, from this April threshold which hasn’t moved since 2013 rises from a single parent earning £50,000 to £60,000 and you lose child benefit totally at £80,000 (not £60,000).
“Consultation on moving it to family income not individual income and hopefully that’ll be in place from April 2026 (this is to stop unfairness for single income/single parent) families.”
Helen Sachdev, working parent champion and director at WOMBA (Work, Me and the Baby) spoke about the changes to the salary income threshold on child benefit: “We are pleased the government has reassessed its approach to the way child benefit is paid and welcome the Chancellor’s announcement of raising the salary income threshold.
“It is also encouraging to hear there will be a consultation on the structure of the benefit which has, to date, been grossly unfair for families. Keeping women in the labour market is crucial to the functioning of any healthy economy. The government must continue to listen to the voices of those directly impacted and chart a course towards genuine equality and opportunities for all families.”