Government ‘in disarray’ over child benefit

bank notes

bank notesThe government has been criticised in some quarters for seemingly back-pedalling on plans to strip better-off families of child benefit.

The plans would see couples with at least one parent earning more than £42,745 a year - the 40% tax rate threshold - lose their payment.

But these have been slammed because a couple who both work and each earn £40,000 would keep all their payments, despite having a healthy total household income of £80,000.

Yesterday, the Deputy Prime Minister Nick Clegg said there would be discussions in the coalition about how these "anomalies" could be addressed.

He told The Agenda on ITV1: "The removal of child benefit from people that earn much more than others will happen. How you actually administer it and exactly the cut-off point - we have always been very open and we will look at that."

But, as a result, the government has been accused of being "in disarray".

A family with one working parent earning £43,000 would lose about £1,750 a year if they have two children, and £2,500 with three. Many say the plans would penalise single-earner families.

The Treasury would not confirm reports that the earnings threshold at which child benefit will be withdrawn could be raised to £50,000 or even £80,000.

The plans are set to come into force from January 2013.

Click here to find out more about what the changes to child benefit may mean for you.