‘We’ll make an extra £1,500 a year’: Parents react to budget’s child benefit tax changes

timeThe chancellor’s budget on Wednesday introduced changes to high-income child benefit charges and set out details of new UK savings accounts for savers. We spoke to a parent who is paying the fee and an investor to get their reaction to the announcement.

“The only annoying thing is that I have to wait”

Andrew Brown, 38, lives in Sheffield and works as a service engineer. A recent pay rise to help him and his colleagues with living costs means he will pay back all the child benefit he and his partner Nadine claimed for his two daughters, aged two and seven. The chancellor’s plan to raise the threshold for repaying benefits in the short term and eventually overhaul them is a welcome surprise.

“Previously I was earning just under £50,000 and had to pay back child benefit, but last year I moved into that range. I stayed at the same company and our director was very generous with the pay rise – and suddenly I had to pay back everything ,”He said.

The amount for the 2022-23 tax year – the latest year for which he has completed a self-assessment form to date – is more than £2,000, plus interest of around £70 to spread the payments over 10 months. He is the family’s sole earner, but the system for recovering costs is based on whether anyone earns more than £50,000, rather than the total household income.

“I did some calculations and I came to the conclusion that when you deduct tax and child benefit I was earning between £50,000 and £60,000 and I was working in a skilled job that was below minimum wage,” he said ahead of the budget statement.

“We’re not miserable – we’re still able to support our family, but Child Benefit does exactly what it says on the tin: it goes to my girls.”

On Wednesday, Jeremy Hunt announced his plans to change the system so that by April 2026 it will be based on household income rather than individual wages. At the same time, he will raise the threshold to £60,000 from April 2024 and halve the benefit clawback rate so that only people earning £80,000 a year or more can repay it in full.

Brown will still have to repay some expenses under the change, but his immediate reaction to the budget change was positive. “In terms of real money, we will be earning about £1,500 more a year. The only annoying thing is that I have to wait for it to come into effect. For this [tax] This year, when prices are still going up, I will still pay back all the loans,” he said.

National insurance cuts will further increase his take-home pay, but he said he was not sure it was justified “when our councils are bankrupt and the NHS is in trouble”, adding: “If I could see it Service will be improved.”

‘I love that he extended Isa allowance’

Kenny Cheung has wisely invested all his spare cash into various stocks and shares Isas over the past few years.

The 42-year-old software developer, who lives in Glasgow with wife Vanessa, said that while they kept a small amount of cash savings to cover unexpected expenses, he had invested much of his spare income in exchange-traded funds – Copycat Funds that index stock markets around the world.

he said he used Ajay BellVanguard and IWeb platforms to manage their investments – always using the couple’s annual Isa allowance of £20,000 each to avoid tax.

Passive ETFs are popular because they are different from actively managed ETFs Funds controlled by highly paid fund managers have very low annual fees.

He said he is currently optimistic about the Vanguard All World ETF, which invests about 60% in U.S. stocks, 16% in European stocks, less than 5% in British stocks, and the rest is distributed around the world, including Japanese, Chinese and U.S. stocks. . Number of emerging markets.

He said he was interested in the chancellor’s announcement on the UK ISA because UK equities may be considered undervalued after years of stagnant growth.

“It’s an interesting idea to get more people investing in UK companies; I like the fact that he has introduced an additional £5,000 Isa allowance (raised to £25,000) for those wishing to invest in UK companies. I’d like to comment on my commitment I’d like to see actual details before funding, but I appreciate the choice to do this.”

He said he would be reluctant to become a significant investor in NatWest if the government sold off its stake in the bank in a big way over the summer.

“I’ve been following the government’s announcement of a ‘Tell Sid’ style sell-off of NatWest shares but to be honest, I don’t think I would buy unless they were selling at a significant discount to the market price. When I was younger I used to Buying individual stocks speculatively. Today, I prefer passive funds that provide diversification,” he said.