Make your money go further
Find the best deals, avoid scams, and grow your savings with our expert guidance. From only £4.99 a month.
Join Which? MoneyCancel anytime.
Child benefit earnings cap to be eased from April
The individual earnings limit will be increased to £60,000
The child benefit earnings cap will rise from £50,000 to £60,000, and the point at which it must be paid back in full will rise to £80,000 saving approximately half a million families an average of £1,300.
Currently, parents claiming child benefit must pay some of it back once either of them earns more than £50,000, and if either parent earns over £60,000 it must be paid back in its entirety.
The new rules, announced by Chancellor Jeremy Hunt as part of the 2024 Spring Budget, increases the base threshold to £60,000 from April 2024, taking some 170,000 families out of paying the charge.
Here we explain more about how child benefit works, and what the new changes mean for parents.
What is child benefit?
Child benefit is a monthly government payment to anyone who is responsible for a child to help pay for anything they need and boost your household budget. It can only be paid to one person, and you don't necessarily need to be the child's parent to receive it, but you must be responsible for a child.
The payments you receive are based on how many children you're responsible for. There's a higher rate for the eldest (or only) child, and then additional lower rates for any younger children. For 2024-25, the rate is £25.60 per week for the eldest child, and £16.95 for each younger child.
There is no upper limit on the number of children you can claim for.
Child benefit rates 2024-25
| Number of children | Total weekly child benefit | Total annual child benefit |
|---|---|---|
| 1 | £25.60 | £1,331.20 |
| 2 | £42.55 | £2,212.60 |
| 3 | £59.50 | £3,094 |
| 4 | £76.45 | £3,975.40 |
| 5 | £93.40 | £4,856.80 |
How the current earnings threshold works
Under the current rules, you'll pay a tax charge (known as the 'high-income child benefit charge' or HCBC) if either you or your partner has an annual income over £50,000. The tax charge equates to 1% of the child benefit paid for every £100 of income between £50,000 and £60,000.
This means that if either parent earns more than £60,000, the benefit must be paid back in its entirety.
Experts have argued that this is grossly unfair, as a couple earning £49,999 each will be entitled to the full child benefit, while a couple where one parent earns £60,000 and the other earns nothing will lose the entire benefit.
How will the new rules work?
The Chancellor has now moved to increase the income threshold to £60,000, and the point at which the benefit must be paid back in full to £80,000.
This means that the new tax charge will equate to 1% of the child benefit paid for every £200 of income between £60,000 and £80,000.
According to Mr Hunt, this should save approximately half a million families an average of £1,300 a year, and take around 170,000 families out of paying the charge all together.
The Chancellor also announced a consultation to move the high-income child benefit charge to a household-based system to be introduced by April 2026. It is currently unclear whether this would involve another increase to the threshold.
Sarah Coles, head of personal finance at Hargreaves Lansdown welcomed the change: ''After a decade of the threshold being rooted to the spot, it meant far more people were being dragged into repaying this benefit – so that one in eight families faced this charge. The change is welcome, but there was scope for a bigger rise. If it had risen with average wages since it was introduced in January 2023, it would be £71,774. However, today’s change is a step in the right direction, and will still make a real difference to an awful lot of families.'
Who is eligible to claim child benefit?
Anyone who is responsible for a child under 16, or under 20 and in an approved form of education or training, is eligible for child benefit.
You're usually considered as being responsible for a child if you live with them or you're paying at least the same amount as child benefit (or the equivalent in kind) towards looking after them.
Contributions towards looking after a child can include:
- Food
- Money
- Clothing
- Christmas and birthday presents
- Pocket money
You can claim child benefit online via gov.uk any time from 48 hours after you've registered your child's birth. HMRC says payments could arrive in as little as three days, and payments can be backdated for up to three months.
- Find out more: child benefit explained
