Child Benefit and Guardian's Allowance: Policy changes

This section of the website explains policy changes that have been announced for child benefit and guardian’s allowance.

Freeze on child benefit rates

In the June 2010 emergency Budget, the Chancellor announced that child benefit would be frozen for three years (2011/12, 2012/13 and 2013/14).

You can find the current and past child benefits rates in our ‘how much can your client get’ section.

Withdrawal of child benefit for higher rate taxpayers

At the Conservative Party conference in October 2009, George Osborne announced plans to withdraw child benefit from higher rate taxpayers. He withdrew this proposal in the March 2012 Budget and replaced it with a proposed ‘High income child benefit charge’ which will came into effect from 7 January 2013.

The cost and savings of this now obsolete proposal can be found in the Comprehensive Spending Review 2010 policy costings document. The House of Commons library produced a useful briefing paper Child benefit for higher rate tax payers which outlined the history of child benefit and the potential impacts of this change. The Government expects that the number of individuals subject to Self-Assessment will increase by up to 500,000 as a result of the measure.

A number of problems and issues were raised with the proposal, including:

The following documents, written by a range of people and organisations, also offered information about the potential impacts of the change and outlined concerns that the plans would be unenforceable in practice.

Change to the way overpayments of Child Benefit and Guardian’s Allowance are recovered

Child Benefit (ChB) is paid to around 7.8 million families at an annual cost of around £12 billion. At the end of 2010/11 the outstanding ChB debt balance rose to £35.59m for around 40,000 individual cases - up from £21.65m in 2009/10.

Where a person is overpaid Child Benefit or Guardian’s Allowance (GA) and it is as a result of either misrepresentation or the failure to disclose information by the claimant, whether fraudulently or not, the overpayment can be recovered from the claimant. When ChB and GA were transferred to HMRC, the provision to recover an overpayment of Child Benefit or Guardian’s Allowance from an ongoing award of one of these benefits was inadvertently lost. The provision in section 107 of the Welfare Reform Act 2012 re-enables overpayments of Child Benefit and/or Guardian’s Allowance to be recovered from future payments of these benefits.

This change has been in place since June 2012 and provides the powers to recover overpayments of ChB and GA directly from ongoing awards, in the same manner as other recoverable overpayments.

HMRC anticipate that between 4000 - 6000 ChB customers will have their overpayment of ChB and/or GA recovered by deductions from their ongoing award of these benefits.

Updated 2 May 2014