The government’s plans are to use the frozen personal tax allowance to create fiscal drag until 2028-29, bringing four million additional people into the income tax net by 5 April 2029 and raise an additional £44.6 billion in tax. Those plans haven’t changed.
Raising of the high-income child benefit charge from £50,000 to £60,000 is to compensate higher-earners for the fiscal drag caused by freezing personal tax allowances which will push more and more people into the higher rate tax bracket.
In 2024/25, earnings over £50,270 will be taxed at 40%.
Up until now, if one person earns over £60,000, the family have to pay back all child benefit in extra tax. Between 50,000 and 60,000, some of it - 1% for every £100 of earning between £50k - £60k.
The Chancellor is saying to higher earners, we will take more of your earnings in tax but we will let you keep more child benefit.
He also announced a consultation on child benefit rules, to apply it to collective household incomes rather than for individuals from April 2026. At the moment the rules are unfair and favour some couples.