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The government is abandoning a planned change to child benefit rules which would have allowed more parents to claim the payment.
Currently, child benefit is withdrawn when a parent earns more than a certain amount, but the previous Conservative government had planned for claims to be based on household income from April 2026.
Chancellor Rachel Reeves made no mention of child benefit in her budget speech on Wednesday, but the budget document says the proposed change would cost too much to implement.
The current system has been criticized as unfair as some households can claim the payment even if their total income is higher than that of a single parent or a family with a single high income.
You can benefit from family allowances if you are responsible for the education of a child under 16 or under 20 if they are in approved education or training.
Only one person can claim the benefit for a child. Payments are £25.60 per week for the eldest or only child and £16.95 per week for younger children.
However, payments are reduced once a parent begins earning a certain level, known as the High Income Child Benefit Charge (HICBC).
In his last Budget in March, former Chancellor Jeremy Hunt increased the income level at which people must start repaying part of benefits from £50,000 to £60,000, and the level at which they are withdrawn entirely from £60,000 to £80,000.
It also announced plans to move to a system where HICBC would be based on household income, not individuals, following a consultation.
But the budget document published on Wednesday states: “The government will not pursue the reform aimed at basing the HICBC on household income. Indeed, this would have resulted in a significant budgetary cost of £1.4 billion by 2029-30 if the threshold was set. at £120,000-160,000, where no family would lose out. »
Father-of-two David Stuart welcomed Mr Hunt's proposal in March, saying it would make the system “fairer”.
He said he was disappointed with the decision to abandon it and that it was “buried” in the document and not included in Reeves' speech.
David, who lives in Whitburn, West Lothian with his wife and two children, now earns more than £80,000 and is therefore not entitled to any child benefit. His wife is a self-employed childminder and earns around £10,000 a year.
“We don’t necessarily need full payment,” he said. “But another couple (who earn more) can claim the whole thing and we can’t claim anything.”
If he and his wife could claim part of the payment, it could be used to “put money aside for the kids,” he said.
Laura Suter, personal finance director at AJ Bell, said: “There is no doubt that it would have been a huge administrative task for HMRC to assess couples based on their household income rather than sole income, which which means there is no easy solution.”
However, by not making this change, “it means the system that punishes single people will remain.”
The budget document also revealed that the government would allow employees to pay their HICBC through their tax code from 2025, instead of having to submit a self-assessment tax return.
Ms Suter said it would improve the “administrative side” of paying child benefit, which has been criticized for being confusing.
“However, this only fixes a problem in the system when in reality it needed reform on a larger scale. The system's complications mean it is underutilized and poorly understood. »
