BUDGET 2012: Child benefit cut-off rises to £60,000 as Osborne bows to family pressure

Families were spared the worst of threatened changes to child benefit today after the Chancellor bowed to pressure and revised plans to introduce a lower threshold for cutting off payments.

The government had planned on scrapping child benefit for families earning more than the £42,475 threshold for 40 per cent tax.

However, Chancellor George Osborne announced that child benefit will now only be completely withdrawn when one person in the household earns over £60,000.

Increase: The final cut off point for child benefit will rise to £60,000, the Chancellor George Osborne announced in his budget speech today (file picture)

Increase: The final cut off point for child benefit will rise to £60,000, the Chancellor George Osborne announced in his budget speech today (file picture)

If someone in the family earns over £50,000 then child benefit will be gradually reduced by 1 per cent for every extra £100 earned over this amount to avoid a 'cliff-edge' cut off.

The proposals were previously condemned by charities, women's groups and family campaigners – who feared that the government may introduce a means tested assessment.

Mr Osborne told the Commons in his Budget speech, 'In the Spending Review, we took the difficult decision to remove child benefit from families with a higher rate taxpayer.

'I said then that I simply could not justify asking those earning £15,000 or £30,000 to go on paying Child Benefit to those earning £80,000 or £100,000.

 

'We want to avoid a cliff-edge that means people lose all their Child Benefit when they earn just a pound more.'

The measures - more generous than expected - will see 750,000 parents keep some or all of their benefit and only ten per cent of the wealthiest adults will lose the benefits completely.

Child benefit is currently worth £20.30 a week for the first child and £13.40 each for any more, regardless of the parents’ income.

However, experts have raised concerns that the changes could further complicate the already complex system.  

Dr Katherine Rake, chief executive of the Family and Parenting Institute, said: 'The removal of the cliff-edge loss of child benefit at £43,000 is a relief.

'But we remain concerned that money saved by denying some families child benefit could be eaten up through the expense of administering a tapered system.

'Mr Osborne said simplicity was a core aim of his tax system. Universal Child Benefit was an appealingly simple system.'

Patrick King, tax partner at MHA MacIntyre Hudson, said: This move simply moves the precipice rather than makes things fairer. The dual earner household earning £100,000 equally split will get to keep their allowance in full whereas a single income home earning £60,000 or above will receive nothing.'