Child benefit: Planned reform scrapped

The government is scrapping a planned change to child benefit rules that would have allowed more parents to claim benefits.

Currently, child benefit is withdrawn when one parent’s income exceeds a certain amount, but the previous Conservative government planned to make claims based on family income from April 2026.

Chancellor Rachel Reeves made no mention of child welfare in her budget speech on Wednesday, but budget document Point out that the proposed changes would be too costly to implement.

The current system has been criticized as unfair because some families can apply for subsidies even if their total income exceeds that of a single parent or the only high-income earner.

You can get child benefit if you are responsible for a child under 16, or under 20 if they continue in approved education or training.

Only one person can apply for benefits for a child. The payment is £25.60 per week for the eldest child or an only child and £16.95 per week for younger children.

However, once a parent’s income reaches a certain level, known as High-Income Child Benefit (HICBC), the payments decrease.

in his The last budget in MarchFormer chancellor Jeremy Hunt raised the income level at which people have to start paying back part of their benefits from £50,000 to £60,000, and the level at which benefits can be fully withdrawn from £60,000 to £80,000.

He also announced plans to move to HICBC’s system based on household income rather than individual income, following consultations.

But budget documents published on Wednesday said: “The government will not proceed with reforms to base HICBC on household income. This is because if the threshold is set, the fiscal cost will be £1.4 billion by 2029-30. 120,000 to 160,000 sterling so that no family suffers.”

David Stuart is a father of two Welcomes Mr Hunt’s March proposalsaying it would make the system “fairer.”

He said he was disappointed with the decision to drop it and that it was “buried” in documents and not included in Reeves’ speech.

David, who lives in Whitbourne, West Lothian, with his wife and two children, now earns more than £80,000 and is therefore not entitled to any child benefit. His wife works as a self-employed childminder and earns around £10,000 a year.

“We don’t necessarily need to pay in full,” he said. “But another couple [earning more] Everything can be claimed, but we cannot claim anything. “

He said if he and his wife could claim part of the payment, it might be used to “save money for the kids.”

Laura Suter, director of personal finance at AJ Bell, said: “There is no doubt that HMRC’s assessment of a couple’s household income rather than separate income will be a difficult administrative task, meaning there is no simple solution.”

However, if changes are not continued, “it means a system that penalizes single earners will continue to exist”.

Budget documents also reveal that the government will allow employed individuals to pay HICBC through the tax code from 2025, rather than having to submit a self-assessment tax return.

Ms Souter said it would improve the “administrative aspect” of Child Benefit, which has been criticized for being chaotic.

“However, this only addresses one problem in the system, which actually requires much larger reforms. The complexity of the system means it has low claims rates and is not well understood.”