The Conservatives have recently pledged to reduce tax for parents by increasing the income threshold at which families start paying a levy on child benefit.
The policy aims to increase the high income child benefit tax charge threshold (HICBC) to £120,000 and calculating the benefit based on total household income instead of individual earnings.
Presently, if either parent or their partner earns above £60,000, they begin to incur the high income child benefit tax charge and lose the benefit entirely when earnings reach £80,000.
However, if the Tories secure victory in the 4 July election, they have vowed to elevate the threshold to £120,000 before any tax is due and to £160,000 before the benefit is removed.
Increasing the HICBC threshold as proposed will also mean most individuals who have to complete a self assessment tax return for the sole reason of paying the HICBC will not have to.
According to the Conservatives 700,000 families would be gaining an average of £1,500 (by paying less income tax) from the change with an expected implementation date of Autumn 2025.
The government’s recent action comes after its April decision to increase the threshold for the high income child benefit tax charge from £50,000 to £60,000 which came in to effect from April 2024.
Announcing the Conservative’s election policy on Thursday, Mr Hunt said: “Raising the next generation is the most important job any of us can do so it’s right that, as part of our clear plan to bring taxes down, we are reducing the burden on working families.
Tom Waters, associate director of the Institute for Fiscal Studies said the change “would mean that only 900,000 families (12% of those with children) would still be losing some or all of their child benefit”.
The Conservatives claim that the adjustment, costing £1.3bn by 2029/30 tax year, could be financed from an annual £6bn accrued by tightening measures on tax avoidance and evasion.
