Mum’s the word!

Everything is going up – and when you have children, the cost of keeping them in clothes, school stuff and other ‘essentials’ (in their minds, if not in yours) is astronomical.

Ensuring parents can at least give their families the basics was the reasoning behind the creation of Child Benefit.  Until recently parents got £24 a week for their first child and £15.90 a week for each additional child.  The good news is that these benefits rose in April 2024 to £25.60 for the first child and £16.95 per week for each extra child.

Along with that the earning threshold for parents has also risen.

Until recently the point at which Child Benefit entitlement started to reduce was when either parent earned £50K a year, or more.

It’s always been something of a controversy that this is NOT the cumulative income of both parents, but of either individual.  So, if both parents were earning £49K per annum, they would still get the maximum Child Benefit allowance.  However, in a single income family, the minute the sole earner exceeded £49,999 a year, the Child Benefit allowance started to reduce.  If one partner earned more than £50K and the other only £10K – the allowance still reduces.

However, this threshold has now risen to £60K per annum, once this threshold is exceeded the High Income Child Benefit Charge kicks in, and once earning exceed £80k the benefit is repaid in full. The £60k threshold still applies to either parent.

The challenge for parents is that, if they are employed and pay tax based on PAYE, this can go unnoticed – until the end of the next tax year.  Then HMRC will write demanding the Child Benefit that has been overpaid is refunded.

That’s not always an easy thing to do, as even families with a good income tend to live up to their income and don’t stash money away in case there’s an unexpected tax bill.  With rising living costs and inflation, it’s worth being aware of this as you celebrate your next pay rise.