Child benefit is changing from 7th January 2013. Households where at least one person earns more than £50,000 will have the benefit effectively reduced or stopped.
The withdrawal will be gradual where income falls between £50,000 and £60,000. The amount of the charge will be 1% of the amount of child benefit for every £100 of income that exceeds £50,000. Where income exceeds £60,000 the charge will equal the full amount of the child benefit.
For tax year 2012/13, child benefit stands at £20.30 a week for the first child and £13.40 for each child after that.
The change will cost families with three children and at least one parent earning more than £60,000 about £2,450 a year – the equivalent of in excess of £4,000 per year pay cut.
Payments to UK pensions can effectively be subtracted from income when calculating withdrawal of child benefit.
Contact us for more information and find out how these changes affect you.
Farrell Financial Planning offer independent financial advice on pensions and much more.