The Conservatives have pledged to ease the child benefit tax burden on 700,000 families from April 2026.
The party has said it would double the threshold for paying the high income child benefit tax charge (HICBC) to £120,000, which it says saves the average family £1,500.
The charge currently snares households with one person earning more than £60,000 – making 1pc of child benefit repayable for every £200 their salary exceeds it by.
Instead, the new regime would look at overall household income instead of an individual’s – removing the rule that punished families with one high-earning parent and another out of work.
The policy would also double the amount when child benefit becomes completely repayable to £160,000, providing a boost for those with low six-figure incomes.
Child benefit is currently £25.60 a week or £1,331.20 a year for the first child, and £16.95 a week or £881.40 a year for each additional one. There’s no limit to how many children you can claim for, with some families claiming for more than 13.
According to the latest HMRC figures, almost seven million families receive payments, but many have to repay some or all of it because of the high income child benefit charge.
First introduced in January 2013, it initially kicked in when one parent or guardian, or their live-in partner, earned more than £50,000. For every £100 earned above that amount, 1pc of the benefit had to be handed back, meaning those with a salary exceeding £60,000 repaid everything they claimed.
In the Budget, Chancellor Jeremey Hunt overhauled the system by increasing the threshold to £60,000 and halving the taper, meaning families now lose 1pc for every £200 more than that amount.
It was the first change since the HICBC was introduced in 2013, with a projected cost of £540m in the first year and £3.2bn by the next election.
The charge has been criticised because it starts as soon as one person earns more than the set amount, even if the other earns nothing. This means households with two parents both earning up to £60,000 can keep any child benefit, while those with one parent earning more than that have to repay.
The new rules would offer a significant boost to households where someone earns more than £80,000, but the combined income is less than £160,000.
They will also benefit households that previously had to repay because the highest earner made between £60,000 and £80,000 a year.
Shaun Moore, of investment firm Quilter, said: “The Tories’ announcement that they will peg the charge to household income will be music to many parents’ ears. However, this is not a new problem, and it has taken years for the penny to drop in Government that the current rules create a perverse environment where a high earning single parent could lose their full child benefit entitlement despite having a much lower household income than two parents earning just below the lower threshold.
“Although this will certainly add more complexity for HMRC into the child benefit system, the benefits of rectifying the current system’s unfairness far outweigh these challenges.”
Alice Haine, of wealth firm Evelyn Partners, said doubling the threshold and the taper rate would be “widely welcomed by parents”.
“Even more significant is the pledge to base the benefit on overall household income rather than that of the highest earner. This will eradicate the unfairness of the current system, which penalises single-income parents or couples where one partner earns a significantly higher salary than the other.”
Victoria Benson, of single parent families charity Gingerbread, said it had “campaigned for many years to make child benefit fairer.”
She said: “The current system penalises single parent families who are hit by the tax charge on child benefit when their household income is half that of a two-parent family. Whichever party wins at the next election must take a long hard look at the impact of its policies on single parent families in all income brackets.”
During the Budget, Mr Hunt said the Government would consult on basing the HICBC on household income rather than individual income.
In announcing it will deliver that pledge, the Tories have committed to a cost of £1.3bn in 2029-30, with legislation by Autumn 2025 and the new system rolled out in April 2026.
Almost half a million families were left out of pocket earlier this month after a glitch delayed their child benefit payments.
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