Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what recent assessment his Department has made of the fairness of the High Income Child Benefit Charge.

The High Income Child Benefit Charge (HICBC) is a tax charge which applies to anyone with an income of over £50,000 who gets Child Benefit, or whose partner receives it. The charge increases gradually for those with incomes between £50,000 and £60,000 and is equal to one per cent of a family’s Child Benefit for every extra £100 of income that is over £50,000 each year. Where income exceeds £60,000, the tax charge is equal to the amount payable in Child Benefit. HICBC is calculated on an individual rather than a household basis, in line with other income tax policy.

Basing HICBC on household incomes would mean finding out the incomes of everyone in each of the 7.7 million households currently registered for Child Benefit. This would effectively introduce a new means test, which would be costly to administer and create burdens on the majority of families who receive Child Benefit. The Government decided that charging HICBC to those on higher incomes ensures that everyone makes a fair contribution, while those with the lowest incomes continue to be supported.

The Government set the HICBC thresholds at these levels to help target public expenditure in the way it considered most effective. As with all elements of tax policy, the Government keeps this under review as part of the annual Budget process.