Issue: On 7 June 2024, we announced a bold plan to reform Child Benefit so families can earn a combined £120,000 before they begin to lose it – a tax cut worth an average £1,500 a year.
- We have already cut taxes for working parents by raising the High Income Child Benefit Charge threshold – but we need to go further to encourage more people into jobs and reward hard work.
- That is why we will change Child Benefit to a household rather than an individual basis, and set the combined household income at which a family will start losing Child Benefit at £120,000 – an average tax cut worth £1,500 a year for 700,000 families.
- The Conservatives have a bold plan to cut taxes for families and grow our workforce – Labour would take us back to square one by hiking taxes by £2,094 on every family and penalising hard work.
We are doing this by:
- Cutting taxes for 700,000 families by reforming Child Benefit, ensuring parents are never penalised for hard work. We will ensure the High Income Child Benefit Charge is only paid by households with a combined income of more than £120,000 per year, up from £60,000 right now. We will also extend the taper rate – the point at which Child Benefit is fully withdrawn – to £160,000 per household. This will end the unfairness in the current system, especially for single parent families, and benefit 700,000 households by an average of £1,500 per year, and it will mean nobody is worse off than under the current system.
- Already supporting almost 500,000 families by changing Child Benefit, giving parents the choice to return to work. In the Spring Budget 2024, we raised the High Income Child Benefit Charge threshold from £50,000 to £60,000 and halved the rate so it is not paid in full until you earn over £80,000 – estimated to support nearly half a million families this year with an average gain of up to £1,260 towards the costs of raising their children. These changes have taken 170,000 families out of paying HICBC altogether (HM Treasury, Spring Budget, 6 March 2024, link).
- Incentivising more people to work through our Child Benefit changes, growing our economy and workforce. Since the changes to Child Benefit introduced in the Spring Budget 2024, the OBR have estimated that those already working will increase their hours by a total equivalent to around 10,000 full-time individuals by 2028-29 (HMRC, The High Income Child Benefit Charge Threshold, 6 March 2024, link).
- Building on our raft of tax cuts already delivered, including cutting the double tax on work for 29 million working people this year, rewarding hard work across the country. Because we stuck to the plan and more than halved inflation, we have delivered a double tax cut to National Insurance for 29 million people. Our tax cuts put £900 back in the pockets of the average worker on £35,400 a year and £650 back in the pockets of a self-employed person on £28,000 a year (HM Treasury, Spring Budget 2024, 6 March 2024, link).
- In comparison, Labour would hike up taxes on working people and refused to back our Child Benefit changes, showing they have no plan to reward hard work. Labour failed to vote for our cuts to the double tax on work or changes to make Child Benefit more generous – now they want to hike up taxes on every working family by £2,094 a year, taking the country and our economy back to square one (UK Parliament, Finance (No.2) Bill, 13 March 2024, link; The Conservative Party, Labour’s tax rises, 17 May 2024; link).
We are committed to rewarding aspiration and encouraging people into work by allowing hard working parents to keep more of what they earn. This tax cut – paid for by clamping down on tax avoidance and evasion – will help grow our workforce and economy, meaning more money for our vital public services.
