MSE News

Spring Budget 2024: Child Benefit shake-up confirmed to fix 'unfairness' in system – a major campaign win for Martin Lewis and MSE

The Chancellor Jeremy Hunt has today (Wednesday 6 March) revealed plans to address the "unfairness" in the current Child Benefit system. This follows extensive campaigning on the issue by MoneySavingExpert.com (MSE) and its founder Martin Lewis. Currently, some families get less (or no) support as a result of overcomplicated tax rules.

Martin Lewis: 'WE GOT THE WIN ON CHILD BENEFIT!'

Martin had grilled the Chancellor on the Child Benefit system earlier this January when he asked for the "grossly unfair" rule – which requires anyone earning between £50,000 and £60,000 and claiming the benefit to pay some of it back – to be fixed. This was followed by an open letter sent by Martin to Mr Hunt on the issue. 

Commenting on today's news as the shake-up was announced, Martin said: 

Child Benefit shake-up confirmed – here's what's happening

Currently, there is an unfairness in the Child Benefit system, which means that a couple could earn a combined income of £98,000 a year (£49,000 each) and get full Child Benefit, while a single parent family earning £60,000 a year wouldn't get any – nor would a two-parent family with one earner getting £60,000 and over. 

But from 6 April, the Chancellor has announced that:

  • You won't have to pay any of your Child Benefit back until you start earning £60,000 a year – the current limit is £50,000 a year. This is also known as the 'high income Child Benefit tax charge'. This change will stop 170,000 households from paying this charge, according to the Government.

  • You'll be able to earn up to £80,000 a year before you lose your Child Benefit entitlement completely – currently, the limit is £60,000.

    Under these new thresholds, for every £200 of income you have above £60,000, you'll need to pay back 1% of the maximum amount of Child Benefit you're entitled to. Once you hit £80,000 a year, the charge you'll pay back is 100% of your entitlement, meaning you effectively get zero extra cash (though it's still worth claiming as doing so can boost your state pension). 

Both of the thresholds had been frozen since April 2013, something we'd argued was unfair because it fiscally-drags 100,000s more families into this situation each year.

In addition, the Chancellor has confirmed that a consultation will launch in "due course", which will examine whether to change Child Benefit eligibility to being based on household income, rather than on individual income, by April 2026.

Child Benefit is a monthly payment, worth at least £1,200 annually, for anyone with parental responsibilities for children under the age of 16 (or up to 20 in full-time education). For full information on how it works, see our Child Benefit guide.  

How to opt back in to receive Child Benefit payments if you've opted out

If you've previously registered for Child Benefit but opted out of receiving payments to avoid the high income charge, you can choose to opt back in once the thresholds are increased from 6 April.

There are two ways to do this:

  1. Fill in the online form on Gov.uk. You'll need your 'Government Gateway' user ID and password to do this. If you don't already have this, you can create it when you fill in the form. 
  2. Contact the Child Benefit office directly and ask them to restart your payments.

After the Child Benefit office gets your request, it can take up to 21 days before you get your first payment.

We'll share more detailed, step-by-step help on how to opt back in to payments closer to April – sign up to our weekly email to stay in the loop.

In the meantime, if you or your partner have an income of £80,000 or more, it's still worthwhile filling in the Child Benefit form and registering your entitlement, as you can opt out of receiving the Child Benefit payment itself but keep entitlement to NI credits when you apply. See more on this in our Child Benefit guide.

Many families get less (or no) support as a result of overcomplicated tax rules

When Martin wrote his letter to the Chancellor in January this year on the issue, MSE also wrote an accompanying report filled with evidence on the impact the high income charge was having on single-income families who were caught out by the rules. 

Among the most vulnerable included:

  • Single-parent households (including those widowed/bereaved).
  • Households where one parent can’t work due to their own disability, illness or physical/mental health challenges. 
  • Households where one parent has limited work capability due to caring for a child with a disability, illness or physical/mental health challenges.

The charge as it currently stands means that households like these, already facing stress and uncertainty, are losing out on much-needed support. This is especially unfair as households in these situations may have limited earning potential compared to households with two adults who are both able to work – which is why today's changes have been welcomed by both Martin and MSE.

We received a huge response from our readers on social media, the MSE Forum and via email on this topic. Here's just a small selection of what they had to say: 

"There is currently a huge injustice with the repayment thresholds for Child Benefit […] I think it’s imperative the repayment threshold looks at the household income in the interests of fairness rather than the salary of the highest earner."

"If I earned £37,500 and my partner the same, then we wouldn’t have to pay it [the High Income Child Benefit charge]. But me at £50,000 and partner at £25,000 means we have to. Madness, wrong and unfair.”

"It seems unjust that families that have one parent with an income surpassing £50,000 annually are disqualified or receive a reduced amount of the benefit.

"The benefit isn't based on joint income but rather on the income of one individual within the household. This setup puts families in a predicament where they are unfairly penalised, especially when one parent's income surpasses the threshold."

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