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Child benefit to be cut

Child benefit to be cut

Category: Money

Updated: 27/10/2010
First Published: 04/10/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Parents paying the higher rate of tax will have their child benefits cut from 2013, the Chancellor has said.

Speaking to the BBC ahead of the Conservative Party's conference, George Osborne confirmed the move saying it would save the UK around £1 billion.

It is estimated that approximately 1.2 million families paying the higher rates of 40% or 50% income tax will have their payments stopped.

Under the new rules, families where one or both parents earn about £44,000 – the level at which the higher rate of tax is implemented – will have their benefits taken away.

However, families with two parents that earn just under the £44,000 mark each will keep receiving child benefit payments.

It means that families with two parents could potentially keep their child benefit entitlements despite raking in over £80,000 a year between them, while a single parent earning £45,000 would see their payments stopped.

The Chancellor defended the move, saying the alternative would be a complicated means tested system.

The plans are just a small part of the coalition Government's attempts to cut the size of the deficit of the UK.

Presently, child benefit is paid to all families with children, and is thought to cost the country some £12 billion very year.

Parents receive just over £20 a week for their first child, with £13.40 paid each week for each subsequent child. These payments are kept up until children reach the age of 19 if they stay within the education system.

Mr Osborne urged top-rate taxpayers to stop claiming the benefit, saying it would be the most sensible course of action.

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