Tax expert warns parents may lose Child Benefits under new rules | Personal Finance | Finance


A tax specialist has cautioned that due to a recent rule alteration, parents could lose their child benefits. Andy Wood says modifications to the system could result in parents missing out.

The weekly Child Benefit payments vary from £25.60 for the first-born or only child to £16.95 for each subsequent child. These payments, made until the child is either 16 years old or 20 if they are in full-time education or training, assist needy households and enhance their overall financial stability and well-being.

Andy said: “The threshold for Child Benefit eligibility currently stands at £80,000 but it’s important to note that this figure includes the value of certain work benefits. When considering eligibility for Child Benefit, it’s important to understand that the calculation extends beyond basic salary. For instance, a parent earning below the cap may find themselves ineligible if the value of their benefits, such as a company car or fuel allowance goes over the threshold.

“An individual’s adjusted gross income for Child Benefit purposes involves various income sources, including gross salary, other employment income, taxable benefits, pensions income, self-employment profits, and investment income.

“Deductions can be made for certain expenses, such as pension contributions, tax-deductible business expenses, and costs related to schemes like the cycle to work scheme. These deductions play a key role in determining the final adjusted gross income for Child Benefit purposes.

“It’s worth noting that over the first 16 years of a child’s life, HMRC may provide parents with more than £17,000 in Child Benefit payments if their income falls below the £80,000 cap.

“The recent changes in Child Benefit thresholds signify a concerted effort to align support mechanisms with evolving economic realities. With the lower threshold raised to £60,000 and the upper threshold extended to £80,000, a broader spectrum of families can access financial assistance.

“The policy of fully withdrawing Child Benefits for individuals earning over £80,000, where some parents may need to repay a portion due to the high-income child benefit charge, prioritises individual income over household earnings. This approach ensures a precise assessment of eligibility, channelling resources effectively to those who require support.”



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