Lack of child benefit reform is bad news for single-parent families, says Martin Lewis

Chancellor Rachel Reeves has defied calls to reform child benefit and change the way it is calculated – which money expert Martin Lewis labeled as ‘bad news’ for single-income families.

Child benefit will continue to be based on individual income rather than on family income, i.e. on everyone who earns £60,000 or earlier tax a high income tax above that threshold must be paid every year.

In a couple where they both earn £60,000 or more, the person who earns more will have to pay the costs, regardless of who claims child benefit.

Child benefit is withdrawn if the income of the partner with the highest income is € 80,000 per year.

The system has been branded ‘unfair’ because if both parents earn less than £60,000 they are allowed to keep full child benefit, but if anyone earns more – whether single or a couple – he or she faces the indictment.

Parents claimed that it could even limit people’s career choices as they wanted to stay below the income limit.

Mr Lewis wrote on social media: “This is a shame and creates widespread inequality, bad news for single parents and single earners.”

He told BBC Radio 5 Live: “I am very disappointed. I don’t like dishonesty. The way our child benefits are paid is unfair to single parents and single-income households.”

He said he had campaigned for change but Ms Reeves’ decision not to make the change was enshrined in background documents prepared for the government. Budget.

Former Conservative chancellor Jeremy Hunt announced new interim rules in his spring 2024 budget to base the levy on household income rather than the highest earner, but the change was never implemented.

Wednesday’s budget document said: “The government will not continue with the reform of basing child benefit for high incomes on family income.

“This is because setting the threshold at £120,000-£160,000 would have cost significant budgetary costs of £1.4 billion by 2029-30, with no family losing out.”

One parent told Mr Lewis: “I have a sole income of over €50,000 and I have to pay tax on my child benefit. In addition, he earns 85k divided over two incomes and pays no tax. How is this fair?”

Principal Secretary to the Treasury Darren Jones confirmed in a written statement that child benefit rates across Britain would rise from April, in line with the CPI.

This brings the rate for the eldest child to £26.05 per week, from £25.60, and for other children to £17.25 per week, from £16.95.

As expected, Ms. Reeves didn’t cancel either the much criticized maximum for two children.

The budget also increased the rate employers pay for national insurance from 13.8 percent to 15 percent, and the starting threshold will be reduced from £9,100 as it currently is to £5,000 pounds per year. For smaller employers, the grant will increase to £10,500.

Mr Lewis said that while it was not a direct cost to workers, the higher national insurance was “likely to have a knock-on effect on consumers and workers in the future”.

The Budget documents also revealed that the Chancellor has not extended the tax relief for first-time homebuyers.

The lighting for those buying their first home was set at £425,000 on a temporary basis in 2022, but from April next year the zero-rate band will return to £125,000, meaning 20 per cent of first-time buyers will have to pay more in stamp duty, experts have been told.

Mr Lewis also warned everyone about the minimum wage to ensure they would get the full increase next year.

He said: “There are reasons why you might not get the full minimum wage. They may not take the cost of your uniform into account. Maybe they don’t count all your working hours.”