Briefing: Means-testing Child Benefit

George Osborne’s removal of child benefit from high-earners kicks in on Monday, but what exactly does it entail?

Who loses what?

Initially, Osborne’s plan was ‘to remove child benefit from families with a higher rate taxpayer’, as he announced in the Spending Review of October 2010. (This year, that’d be anyone earning over £42,475.) But after criticism that this would hit too many people, and that it would create a ‘cliff-edge effect’ (whereby someone earning £42,475 would keep all their Child Benefit but someone earning £42,476 would lose it all, so the lower-earner would end up better-off), Osborne changed his mind.

In his Budget of March 2012, the Chancellor announced that only families with at least one parent earning more than £50,000 would lose out, and that the removal would be tapered. Families will lose 1 per cent for every £100 their highest-earner earns over £50,000 — up to 100 per cent for those earning £60,000-plus.