Government Announces Plans to Abolish Child Benefit for Higher Earners

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The Conservatives have announced plans to abolish Child Benefit for people who pay Higher Rate Tax - but have already modified their position in light of the public response. The Chancellor Mr. George Osborne announced that any family where even just one of the parents pays "Higher Rate Tax" will lose Child Benefit from 2013.

So basically, if one parent earns more than £43,875, (using 2009/10 figures), then the family stands to lose tax-free income of at least £1,055. Which means that going just £1 into the "Higher Rate Band" can cost will over a thousand pounds - more, of course, if there is more than one eligible child in the family.

Given that entitlement to very many benefits depends on an assessment of the family's (or a couple's) total income, it is wholly unsurprising that there has already been considerable adverse reaction from across the country, to the news that just one parent's income falling into the Higher Rate Band triggers forfeiture of the entire benefit, whilst a couple can earn more than £80,000 between them and yet remain eligible, provided neither actually earns more than the £43,875 threshold.

HMRC News

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