Parents are being warned they could be impacted by Child Benefit thresholds should they get a promotion or pay rise. Households need to bear in mind they may have to pay some or all of their Child Benefit back should their earnings pass the threshold.
From the 2024 to 2025 tax year onwards, the threshold increased to £60,000. Crucially, only one parent has to cross the threshold rather than both. A proportion of Child Benefit must be paid back once over £60,000 and all of it at £80,000. This means households where one person earns above this amount may have to repay part of their Child Benefit.
But parents earning below this figure should also consider the rules as they could be affected when they get a pay rise or promotion. For example, someone currently earning £50,000 could easily see their earnings rise above £60,000 due to changes in their job or if they move to a new role. It is something that households can overlook when applying for higher-paying jobs.
Andy Wood, a tax expert at Tax Barrister UK, said: “Many families do not realise that Child Benefit can become repayable once one parent or partner earns over £60,000. The charge is based on individual income rather than household income, which can catch people out. A couple earning £59,000 each may not face the charge, while a household with one earner on £65,000 could.”
“The key figure parents need to understand is adjusted net income. This is not always the same as salary, as it can include things like savings interest, dividends and other taxable income. Pension contributions and Gift Aid donations can reduce adjusted net income, so families should check the full calculation before assuming they are over the limit.”
Andy continued: “A lot of people assume Child Benefit should simply be cancelled once they cross the threshold, but that is not always the best option. In some cases, continuing to claim Child Benefit while repaying the charge can still protect National Insurance credits and entitlement to the State Pension.”
