Unfair Burden on Single Parents?
The recent decision by Chancellor Rachel Reeves to stick with the current child benefit system has sparked concerns, particularly when it comes to single-parent families. Currently, the system calculates the High Income Child Benefit Charge (HICBC) based on individual income rather than household earnings. So, if a single parent earns over £60,000, they're slapped with the HICBC, requiring them to start repaying the benefit, with the full amount clawed back at an income of £80,000.
This system seems especially harsh when you consider dual-income households. Imagine a couple where each person earns just under £60,000, combining for a total of £119,999. They keep full child benefits while a single parent making £60,001 starts losing out. Martin Lewis, the well-known financial expert, didn't hold back in slamming this arrangement, branding it as 'bad news' and 'unfair'—and many agree, particularly those facing the pinch firsthand.
Government Stance and Changes
The Labour government's stand against reforms, backed by claims of a projected £1.4 billion fiscal hit by 2029-30, shows a clear prioritization of the budget over reworking what many see as an inequitable system. Instead of such reforms, the government has chosen minor updates, like letting people repay the HICBC directly through their tax codes starting in 2025, which isn't exactly revolutionary.
And while they slightly bumped up child benefit payments—£26.05 weekly for the first child and £17.25 for others, up from £25.60 and £16.95 respectively—the two-child benefit cap hasn't budged at all. This means families with more than two children won't see any extra benefit from having those babies.
Overall, the public's discontent with the HICBC structure echoes across forums, with many feeling the policy misses the mark on fairness. For instance, a parent lamented having to pay taxes on child benefits with a £50k income, watching neighbors earning £85k jointly sail through without the same burden.
The broader 2024 Budget brings along more than this. National insurance rates for employers are climbing, starting thresholds dropping to £5,000, and changes are even planned for stamp duty. Martin Lewis warns these shifts might not be straightforward, suggesting close scrutiny for unexpected ripple effects, especially for those on minimum wage hoping for hard-earned pay increases.
