Consultation announced on household-based child benefit charge

The Chancellor, Jeremy Hunt, announced in the 2024 Spring Budget on 6 March 2024 that the high income child benefit charge will move to a household-based system, to be introduced by April 2026¹. The same Budget raised the individual income thresholds at which the charge begins and at which child benefit is repaid in full¹.

Under the current rules, a tax charge known as the high income child benefit charge applies if either a claimant or their partner has an annual income over £50,000¹. The charge equates to 1% of the child benefit paid for every £100 of income between £50,000 and £60,000, so that if either parent earns more than £60,000 the benefit must be repaid in its entirety¹. From April 2024 the base threshold rises to £60,000 and the point at which the benefit must be paid back in full rises to £80,000¹. The new charge equates to 1% of the child benefit paid for every £200 of income between £60,000 and £80,000¹. 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 altogether¹.

It is currently unclear whether the move to a household-based system would involve another increase to the threshold¹. The high income child benefit charge is levied on the person with the higher income, which means a couple earning £49,999 each can receive full child benefit while a couple where one parent earns £60,000 and the other earns nothing loses the entire benefit¹.

Child benefit rates for 2024-25 are £25.60 per week for the eldest child and £16.95 for each younger child¹. There is no upper limit on the number of children that can be claimed for¹.

Anyone responsible for a child under 16, or under 20 and in an approved form of education or training, is eligible for child benefit, and it can only be paid to one person¹. Claims can be made online via gov.uk from 48 hours after a child's birth is registered, and HMRC says payments could arrive in as little as three days, with payments backdated for up to three months¹.

Why it matters for households

The threshold change takes effect from April 2024, so families where the higher earner has income between £50,000 and £60,000 keep more of the child benefit they would previously have repaid through the charge¹. Families where the higher earner has income between £60,000 and £80,000 now repay on a gentler slope, at 1% of the benefit for every £200 of income rather than every £100¹. Those with income above £80,000 still repay the benefit in full¹. The charge continues to be assessed on individual income until any household-based system takes effect, so the treatment of a couple with two incomes just below the threshold and a couple with one earner above it remains different in the meantime¹. The consultation concerns the design of a household-based system rather than a confirmed set of rules, and no further threshold change has been reported¹.

What happens next

The consultation on a household-based system is to be introduced by April 2026¹. The new thresholds apply from April 2024¹.