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Spring Budget 2024

Spring Budget 2024: Failings of policy finally recognised by Government


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The proposed changes to the HICBC (High Income Child Benefit Charge) by the Chancellor in his Budget will correct the child benefit unfairness his government introduced

Stefanie Tremain, Partner said:

The proposed changes to the HICBC are extremely welcome, having been heavily criticised for all the points raised by the Chancellor today since its introduction in January 2013. It is, therefore, gratifying for the Chancellor to finally acknowledge the failings in one of his party’s most heavily criticised policies.

The main unfairness stems from the fact that the charge is based on the income of the higher earner in a household rather than total income, which means you can have a household with one person earning £50,000 hit by the charge, and a household with two people earning £49,000 each not impacted.

There are plans to change this so the charge is based on total household income, but this will be subject to consultation and any changes will not be introduced until April 2026. This in itself shows how complicated the HICBC is and it will be interesting to see how the Treasury proposes to deal with the “joint taxation” element of the proposed changes.

The changes to the thresholds are particularly welcome with an immediate (from April 2024) increase in the level at which the charge kicks in from £50,000 to £60,000, and the rate at which child benefit is clawed back effectively doubled. This change makes sense for something that despite being called a “high income” charge, caught basic rate taxpayers. As well as taking 170,000 families out of the charge (according to Treasury figures), it will also mean that many households are no longer required to file tax returns in order to pay the charge, which is great news for taxpayers.

Ideally, the Treasury would find a way to collect the charge via PAYE to ensure that nobody with employment income only is required to file an annual tax return just to pay the Child Benefit Charge, but the move to looking at household income makes this increasingly unlikely. Any taxpayers caught by the charge should also remember to include details of any personal pension contributions and Gift Ad donations made on their tax returns, as this reduces your income for the purposes of calculating the charge.

Would you like to know more?

If you have any questions about the Government’s Spring Budget and how it may impact you, please get in touch with your usual Blick Rothenberg contact or Stefanie Tremain via the form below.

You can also visit our Budget Hub, where you can find our commentary and a range of insights to help you better understand how the Budget may affect you.

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