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Budget 2012: Child benefit cliff-edge tackled | |
(about 1 hour later) | |
Government plans to withdraw child benefit from parents who earn higher levels of income have been altered. | Government plans to withdraw child benefit from parents who earn higher levels of income have been altered. |
Chancellor George Osborne said that the benefit would only be withdrawn entirely from those where one partner earns more than £60,000 a year. | Chancellor George Osborne said that the benefit would only be withdrawn entirely from those where one partner earns more than £60,000 a year. |
The benefit will be withdrawn gradually from those where one parent earns more than £50,000. | The benefit will be withdrawn gradually from those where one parent earns more than £50,000. |
Child benefit totals £20.30 a week for the first child, and then £13.40 for each subsequent child. | Child benefit totals £20.30 a week for the first child, and then £13.40 for each subsequent child. |
There is no limit to the number of children that can be claimed for. | There is no limit to the number of children that can be claimed for. |
So, for a family with two children, the mother would receive £33.70 per week or £1,752.40 per year. | So, for a family with two children, the mother would receive £33.70 per week or £1,752.40 per year. |
The equivalent in terms of earnings, taking income tax into account, would make it worth £2,190.50 for a basic rate taxpayer, and £2,920.67 for a higher rate taxpayer. | The equivalent in terms of earnings, taking income tax into account, would make it worth £2,190.50 for a basic rate taxpayer, and £2,920.67 for a higher rate taxpayer. |
Anomaly | |
The government had planned to remove the benefit from households in which someone earns more than £42,475 in January 2013. | The government had planned to remove the benefit from households in which someone earns more than £42,475 in January 2013. |
The perceived problem was an anomaly that a family with a single earner taking home more than £42,475 would lose child benefit, but a couple each earning slightly less than this could take home £80,000 and keep the benefit. | The perceived problem was an anomaly that a family with a single earner taking home more than £42,475 would lose child benefit, but a couple each earning slightly less than this could take home £80,000 and keep the benefit. |
The other issue of debate was the "cliff-edge". That meant someone earning £42,475 or below would receive the full child benefit. As soon as they earned £42,476, they would lose every penny of the child benefit. | The other issue of debate was the "cliff-edge". That meant someone earning £42,475 or below would receive the full child benefit. As soon as they earned £42,476, they would lose every penny of the child benefit. |
Under the new plans, announced in Chancellor George Osborne's Budget, the child benefit will be phased out when someone in a household has an income of more than £50,000. | Under the new plans, announced in Chancellor George Osborne's Budget, the child benefit will be phased out when someone in a household has an income of more than £50,000. |
This does not deal with the first issue directly, but does address the cliff-edge issue. | This does not deal with the first issue directly, but does address the cliff-edge issue. |
The benefit will fall by 1% for every £100 earned over £50,000. That means those earning more than £60,000 will lose the entirety of the benefit. | The benefit will fall by 1% for every £100 earned over £50,000. That means those earning more than £60,000 will lose the entirety of the benefit. |
Some 7.8 million families receive child benefit, of which 1.2 million would have lost their entitlement under the original proposals. The number affected will be lower under the renewed plans. | Some 7.8 million families receive child benefit, of which 1.2 million would have lost their entitlement under the original proposals. The number affected will be lower under the renewed plans. |