Huge child benefit shake-up will save half a million parents £1,300 a year from today – check if you’re one of them

HUNDREDS of thousands of parents are set for a big cash boost from today as an overhaul of the child benefit system takes effect.

The benefit is designed to help parents with the costs of bringing up children.

From today the monthly payment goes up to £25.60 a week for one child (from £24) and an extra £16.95 a week (from £15.90) is paid for any additional children.  

That’s £1,331 a year for your first and only child and an extra £881 a year for siblings.

Under the old rules, any parent earning over £50,000 would start to lose some of the monthly payment on a sliding scale.

It meant that if you claimed the benefit, you’d have to start paying back one per cent for every £100 above the £50,000 threshold.

When income topped £60,000, the amount paid back would be completely wipe out the benefit.

This has been referred to as the high-income child benefit charge and is paid back through annual self-assessment tax returns.

However, in last month’s Budget the chancellor announced that the threshold for receiving the benefit would be raised.

From today as long as both parents earn below £60,000 they will be entitled to the full child benefit payment.

At the same time, the upper limit for cancelling out the benefit has been raised to £80,000.

As a result, parents earning over £60,000 now repay the benefit at rate of one per cent for £200 of income over the threshold.  

The result is that half a million families with children will see an average £1,260 extra paid out through child benefit.

And 170,000 families will no longer have to pay back child benefit at all.

It means that fewer parents will be caught out with tax bills for thousands of pounds after claiming Child Benefit that needed to be repaid.

It's up to parents to notify HMRC if they are liable for the charge and file a self-assessment tax return to pay it.

CONFUSING SYSTEM

The Child Benefit system has long been criticised as being unfair because one parent can earn only slightly over the threshold and start to lose payments – even if the other parent earns nothing at all.

Whereas two parents can earn just under and still keep it even though they may in effect have a much larger overall household income.

For example, even under the current system two parents earning £59,000 a year - totalling £118,000 in the household - receive the benefit in full.

But a household earning a lot less than that does not get the full payment if just one of the parents earns over £60,000.

At the Budget, Jeremy Hunt promised to look into changing the system so that households are assessed by overall income.

It is hope these changes could take effect in 2026. But an exact timeline hasn't been announced.

WHO IS ELIGIBLE

Child benefit is paid to parents to help with the costs of raising children. It can go towards childcare, or just the overall cost of food, bills and general running of a household.

Payments are usually made every four weeks, plus by claiming child benefit you also get National Insurance credits that count towards your State Pension.

Currently, parents can claim up to £25.60 a week - equating to around £102.40 a month or £1,334.86 a year.

For any additional children, you'll get £16.95 a week, which is £67.80 a month and £883.82 per year.

Only one parent can claim for each child and you normally qualify if you live in the UK and are responsible for a child under 16.

Parents can also claim support for a child under 20 if they are in approved education or training.

You're thought of as responsible for a child if you live with them or you are paying at least the same amount as child benefit towards looking after them.

This might mean you are paying the equivalent amount of child benefit on food, clothes or pocket money.

You should bear in mind, eligibility changes if a child goes into hospital or care and if your child starts to live with someone else.

Foster parents can claim child benefit, as long as the council is not paying anything towards their accommodation or maintenance.

Legal guardians or parents adopting a child can also apply for the benefit, but the child has to be living with them.