Budget 2012: Child benefit cut partially reversed

Under the previous plans, parents earning more than £42,475 a year each – the 40% tax rate threshold – were set to lose their payments from January 2013.

But the move proved unpopular, sparking claims lone parents and single-earner families were being penalised.

A mother and father earning £40,000 each would have kept their payments while a single parent on £43,000 would have lost out under the old proposals.

The new plans allow a family to continue getting the full allowance as long as neither parent earns more than £50,000 a year.

If a parent earns over that threshold, they will lose 1% of the benefit for every extra £100 they earn. This will be taken as an income tax rise.

Households where at least one parent earns over £60,000 a year will not see any gain from child benefit.

The result still creates an anomaly whereby a family can earn £100,000 a year between them and get the full benefit.

But if one parent earns £60,001 and the other doesn't work, they won't gain at all.