What are the impacts of the child benefit updating changes?
The Chancellor has already frozen Child Benefit for three years. But today we heard that the real terms value of this important family benefit will be cut even further as a result of the Chancellor’s plans to limit uprating to 1% a year, regardless of the inflation rate.
What does this mean in practice?
Had Child Benefit been uprated by RPI (the previous Government’s policy) it would be worth £22.34 a week for the first child and £14.75 today – as opposed to £20.30 and £13.40. But at least before today it was set to rise from April 2014. That increase has now also been reduced.
By 2015/16 Child Benefit will be worth around £20.71 and £13.67. This means an annual loss by 2015/16 of £315.40 for a family with two children (and of course for households where one parent earner £50k or more the losses will be even more significant). It also means that by April 2016 families in this position will have lost over £1,000 a year (around £1,090).