Child Benefit

Child Benefit is a tax-free payment that is aimed at helping parents cope with the cost of bringing up children. One parent can claim £20.50 a week for an eldest or only child and £13.55 a week for each of their other children. The payments apply to all children aged under 16 and in some cases until they are 20 years old.

The current rates have been increased slightly after being frozen for three years.

Until last year the benefit had been available to every family with children. But in the 2012 Budget, chancellor George Osborne announced an amended plan to steadily withdraw Child Benefit from families where one parent earns more than £50,000.

In detail, the benefit received is recouped gradually as the income of the highest earning parent rises above £50,000, with the child benefit being eroded completely once their income is £60,000 or more. More than a million people were estimated to have been affected by the cut, with the Institute for Fiscal Studies estimating that they would lose an average of £1,300 a year.

More than 250,000 high earners opted out of receiving Child Benefit but several hundred thousand others missed a deadline to declare they will no longer qualify, meaning they had to fill in self-assessment tax forms. Campaigners say this has created complexity in the system. They also point out that a family where two parents work and both earn £49,000 a year keep their benefit, while a family with a single earner on £51,000, where the other parent may have chosen to stay at home in a caring role, loses part of theirs.

Any Child Benefit paid to high-earners who have failed to opt out is clawed back through the High Income Child Benefit Charge, administered by HM Revenue and Customs. If somebody earning more than £50,000 or their partner keeps claiming Child Benefit, then the higher earner must admit this in a self-assessment tax form. The IFS estimated that 500,000 extra people might have to fill in these forms as a result of the change.

The change came into effect on 7 January 2013.