Spring Budget: How will the chancellor's announcements affect child benefit?

Incoming child benefit changes were among the measures announced by the chancellor in his Spring Budget.

Jeremy Hunt revealed the news in a speech to the House of Commons, which also included a 2p cut to National Insurance and the complete scrapping of non-dom tax status.

As ever the announcements have sparked much debate around how beneficial they will be in reality and who they will directly help.

So, what exactly is child benefit - and how is it being affected by the chancellor's announcement? ITV News explains.

What is child benefit?

Child benefit is a monthly payment from the government which contributes towards the costs involved in raising a child.

Who does it apply to?

Child benefit can be applied for by people raising a child who is:

• Under the age of 16;

• Or under the age of 20, if they stay in approved education or training (e.g. A levels or NVQs)

Only one person can get the benefit per child, but there is no limit to how many children an individual can claim for.

Further information of eligibility criteria can be found here.

When can you apply for it?

Claims for child benefit can be made as soon as the birth has been registered or a child has come to live with you (e.g. fostering or adoption).

The process itself can take up to 16 weeks to be completed and can only be backdated by three months.

Child benefit claims require a CH2 form to be completed and sent to the child benefit office. This can be done either online or by sending it directly to the address mentioned on the form.

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What changes have the government announced?

The threshold at which the high income child benefit rate starts to be charged will increase from £50,000 to £60,000, from next month, the chancellor has announced.

Currently, the charge is triggered when one parent in a household claiming child benefit has taxable income of £50,000 or more.

But the threshold has been criticised as unfairly weighted towards single parents, as it is based on the income of the highest earner.

Additionally, the rate at which the fee is charged will also be halved from 1% of the child benefit payment for every additional £100 earned above the threshold, to 1% for every £200.

As a result, child benefit will not be withdrawn in full until a parent is earning £80,000 or more.

Will the changes make a difference?

Overall, the government estimates that 485,000 families will gain an average of £1,260 towards the costs of raising their children in 2024/25 and that 170,000 families will be taken out of paying the tax charge.

Mike Ambery, retirement savings director at Standard Life, part of the Phoenix Group, said: "The tax system is awash with cliff edges and tapers which not only create a great deal of complexity but also disadvantage certain groups of people.

"Chief among these is the high income child benefit charge and it’s welcome news that the Chancellor has decided to recognise the unfairness of the current system."

He added: "Child benefit can be worth thousands of pounds a year to some families and today’s move could make a real difference in those household where budget are tight after two years of rising prices."

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