From 7 January 2013, child benefit will be reduced for families where one partner earns between £50,000 and £60,000, and fully withdrawn from those who earn £60,000 or more. Earnings include salary, dividends, savings and rental income after deducting gift aid payments and pension contributions
The current rate of child benefit is £20.30 per week for the first child and £13.40 for each additional child.
Where one partner earns more than £50,000, child benefit will still be paid, but to compensate for the benefit the higher earner will pay more tax. The amount paid back will be 1% of the total child benefit received for every £100 of their income which exceeds £50,000. To account for this, the individual will have to submit a tax return.
The child benefit received is based on each individual’s earnings; therefore, if one partner earns over £60,000 and the other earns nothing, they will effectively receive no child benefit. However, if both partners earn just under £50,000 they will retain the full child benefit.