Massive change for families claiming child benefits as major charge to be axed
FAMILIES are set be cut free from a major charge attached to child benefits.
Ministers are considering abolishing the fee for those who earn more than £50,099-a-year and claim Child Benefit.
The High Income Child Benefit Charge is applied if you have an individual income over this figure and either you or your partner get Child Benefit.
It can also be applied if someone else gets Child Benefit for a youngster living with you and they contribute an equal amount to the child’s upkeep.
For instance, if you earn £50,099 – you are entitled to £1,827.80 Child Benefit per-year.
The High Income Child Benefit Charge for this figure would stand at £182.00.
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But the new rules would see this charge scrapped, The Telegraph reported.
The charge also impacts taxable benefits you get from your job, such as a company car or medical insurance.
The value of these benefits will be considered on top of your basic salary when the charge is calculated.
You normally qualify for Child Benefit if you’re responsible for a child under 16 or 20, if they are still in government approved training or education.
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Child Benefit payments continue for 20 weeks after a 16 or 17 year old child leaves education to register with the army or a government sponsored careers service.
It comes as Chancellor Kwasi Kwarteng claimed that plans to reduce childcare costs, including nursery fees will be unveiled soon.
At present, the cost of childcare in the UK is the second-highest among developed nations.
The Government are taking an axe to the charge because they think it discourages households from earning more.
The changes are likely to come in the full Budget next year – probably in April – following the Chancellor’s mini budget on Friday.
It comes as Treasury Officials are drawing up a list of “pinch points” that put people off earning more money over fears of high taxes.
Those set to benefit are 1.6 million savers – with the review set to sake up the lifetime and annual allowances on pension pots.
These currently can encourage employees to take early retirement to avoid the “tax trap”.
Meanwhile, workers who cash in more than £100,000-per-year would be given a full income tax personal allowance.
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The plans amount to a tax break worth up to £5,000 a year to the highest earners.
It comes amid a review of the tax system following a Mini Budget which saw the biggest tax cuts since 1972.