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The government has announced it will not continue with reform to base the high income child benefit charge on household income. Currently the charge is calculated as 1% of the child benefit payment made for each £200 of income above £60,000. If a couple lives together, it is the higher earner whose income is currently considered. The government has decided not to introduce the reform as it would have brought an estimated cost of £1.4 billion by 2029/30.
The government has also announced it will allow employed individuals to report child benefit payments through their tax code from 2025 and pre-prepopulate self assessment tax returns with child benefit data for those not using this service. They have said this will make it easier for taxpayers to get their HICBC right.
Individuals/households who claim child benefit.
The changes to reporting child benefit will be introduced from 2025.
Introducing child benefit to individual tax codes will be a welcome simplification to many employed individuals. Pre-population of returns will also be a helpful simplification.
However, not continuing with the reform to base the HICBC on household income will mean some of the problems with the current system remain. For example, where a household with a single parent earning £80,000 loses all of their benefit, whilst a household with two parents earning £59,999 each loses none of the benefit.