Buried deep in the Budget Red Book (paragraph 5.146) is confirmation that the Government will not be proceeding with reform of the High Income Child Benefit Charge.
Paul Falvey, tax partner at BDO said:
“The previous Chancellor announced that the clawback test would be moved to a total “household income” based system from April 2026, but changes to HMRC data gathering would be required to facilitate this.
“Rachel Reeves confirmed in the Budget that the government will not proceed with the reform because it would come at a significant cost – £1.4 billion by 2029-30 if the threshold was set to £120,000-£160,000, a point where no families would lose out.
“It is disappointing that this measure has been shelved, it seems that the Chancellor has sacrificed a fairer system to save administrative costs as well as tax.
“It remains the case that households with two earners below the threshold (£60,000) will pay less tax than those with one earner above the threshold, even though the overall household income could be the same in both cases. This seems manifestly unfair and illogical.”
