HICBC household-basis reform shelved

The Chancellor decided against reforming the High Income Child Benefit Charge to a household basis, according to an analysis of the Budget statement published on 30 October 2024¹. The idea, set out in the previous Budget, was to measure the income of both members of a couple rather than each individual¹. The Chancellor "baulked at the estimated cost of £1.4 billion to do this", the analysis states, and the idea has been shelved¹.

Moving to a household basis would have created winners and losers unless the income threshold was doubled, and a cost-neutral reform "was clearly not on her agenda"¹.

The Budget confirmed other changes to benefits, most of which had already been announced¹. Working-age benefits rates will rise by 1.7% in April, in line with price inflation but "under half the 4.1% increase enjoyed by pensioners"¹. A working-age person on benefits will see their income increase by around £1.50 a week in April, with the standard personal allowance rising to £92 a week, while the full-rate basic pension will increase by £9 a week to £230 a week¹.

The earnings limit at which Carer's Allowance eligibility ends will be set at the amount earned by someone working 16 hours a week on the National Living Wage, rising by £45 in April to £196 per week¹. The Budget also confirmed the end of pension-age Housing Benefit, with all new claims for housing costs from 2026 administered with Pension Credit, and the accelerated migration of all Employment and Support Allowance claimants to Universal Credit by 2026 instead of 2028¹. The Household Support Fund will be extended, and the amount deducted from benefits to pay outstanding debts limited¹.

Why it matters for households

The decision leaves the Child Benefit means test on its current individual basis, so a household with one earner above £60,000 continues to face the charge while a couple earning just under that each does not¹. The £1.4 billion figure was the estimated cost of doubling the threshold, which the analysis says would have been needed to stop large numbers of households being affected¹. Working-age benefit rates rise by 1.7% in April, around £1.50 a week for a single person on benefits, against a 4.1% rise for pensioners¹. Carers on the minimum wage gain certainty that they can combine work with caring from April, when the earnings limit reaches £196 per week¹. From 2026, pensioners making new claims for help with housing costs will do so through Pension Credit rather than Housing Benefit¹.

What happens next

Statistics due on 12 November should show how the Department for Work and Pensions is progressing with moving legacy benefit claimants to Universal Credit¹. The analysis warns that the third of Tax Credit claimants who failed to move to UC "should act as a warning" for the ESA migration, whose claimants include "some of the most vulnerable people in the country"¹.