Child benefit cuts ‘to hit families hard’

MyFamilyClub case study

family playingChild benefit helps many of us top up our incomes each month, providing a valuable boost to our family budgets.

But new research has highlighted the negative impact proposed Government benefit reforms could have on us parents.

Figures from NFU Mutual indicate that child benefit cuts for high-rate taxpayers could pose a threat to as many as 680,000 families in the UK.

The firm's study suggests that from April next year, the plans could actually affect every single household with a higher-rate taxpayer.

It shows that two-child families could lose as much as £1,750 a year as a result of the benefit reforms.

NFU Mutual's personal finance specialist, Sean McCann, commented that those who pay 40% income tax could face financial issues as a result of the cuts.

He said: "Losing child benefit payments could make a big dent in many household incomes, but for many parents, putting a little more into the pension in order to bring down earnings below the higher-rate threshold could help to make the most of their income.

"The tax efficiency of pension contributions could be key to these families from April 2013. Whatever the outcome, it's vital that all parents start making the most of the tax planning opportunities available to them."

Check out this guide to learn more about child benefit.