General election  

Tories pledge child benefit tax changes for high earners

Tories pledge child benefit tax changes for high earners
The Tories have announced changes to high income child benefit charge. (Kristina Paukshtite/ Pexels)

The Conservative party has said if re-elected it will increase the household income tax threshold for child benefit to £120,000.

A change of the individual income threshold at which child benefit is taxed from £50,000 to £60,000 was first announced in the budget in March. 

Junior minister in the Department for Education, David Johnston, told Radio 4's Today programme: "The change in the budget was to increase the income threshold from £50,000 to £60,000, before people started paying this charge. 

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"What we're doing now is saying a future Conservative government would then calculate this on a household basis, meaning income could be up to £120,000 before people start to pay this charge.

"It is to remedy the the thing that parents have often complained about, which is if you have two people who are just under the threshold, two people on £59,000, They won't pay the charge. But if you have one earner on £61,000 they will pay that charge. 

"The combined result of the change were proposing will mean around £700,000 families will get a tax cut of around £1,500 pounds." 

Danni Hewson, head of financial analysis at AJ Bell said it was clear the party wants to replicate the good will of the "crowd pleaser" boost for parents in the Spring Budget.

However, she said the policy could be challenging for HMRC to manage and questioned how long it would take to implement such a change. 

Hewson added: "There will also be many voters wondering why this couldn’t have been done at any other point over the last 14 years, during which time frozen income tax thresholds and inflation have gnawed away at families’ incomes.

"The government may point to its more recent record and increases to free childcare provision will have helped families – in particular mothers who have struggled to afford to return to the workplace."

Hewson is also a founding member of AJ Bell's Money Matters campaign which found before the latest changes came in just 55 per cent of women returned to work full time after having their first child and just 26 per cent did so after having a third child.

Hewson also asked where this money would come from, with the Tories claiming the plans would cost £1.3bn. 

Johnston was pressed on this issue on the radio to which he said would partly come from reducing tax avoidance and tax evasion which the party believes is around £6bn and claimed the child benefit changes would cost £1.3bn by 2029. 

Shaun Moore, tax and financial planning expert at Quilter, also asked why the change had not been introduced earlier. 

He said: "The government did already intonate that they were moving to a system pegged to household income but the reasonably high thresholds just announced will mean the tax take from the High Income Child Benefit charge will reduce significantly and the vast majority of parents would not suffer the charge.