Policy changes remove child benefit from 840,000 families

Osborne's budget changes will remove the child benefit payout from higher rate tax payers by next April

The child benefit payouts – which provides about £1,000 annually to parents with one child, £1,700 for two children and £2,500 for three – will be removed from 840,000 families following George Osborne’s budget changes.

The Chancellor said he ‘stood by’ his principles that wealthy people shouldn’t receive universal benefits, though he acknowledge the unfairness of a ‘cliff edge,’ so he implemented a compromise.

Anyone with an income of up to £50,000 have nothing withdrawn, while those who earn between £50,000 and £60,000 will gradually lose the benefit at a rate of 1 per cent per £100. Households with incomes exceeding £60,000 will receive nothing at all.

The cuts mean that by next April, 90 per cent of families will still receive the payout.

The Government said £2.5 billion per year would be saved with means testing child benefit, but critics suggest the changes will be expensive to carry out in addition to complicating tax affairs for families.

Osborne’s compromise fails to take into account whether a family survives on one income or two, which means one-earner families are harder hit by the new arrangement.

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