Paul Grant, Accountancy Age, Friday 8 October 2010 at 09:48:00

Budget move to increase tax allowance for the most in need will catch nearly a quarter of a million more families in the higher rate band


The raising of the personal tax allowance threshold in this year?s emergency Budget could see almost a quarter of a million more families lose their child benefit.

The decision in June?s Budget to increase personal tax allowance to 7,475 next April from 6,475 was accompanied by a lowering of the 40% higher rate threshold to 42,375 from 43,875, so that only the most in need benefitted from the change.

This, the Daily Mail reports, will push another 230,000 workers with families into the higher tax band and see them lose their child benefit. The government has previously said that around 1.2m families would be affected by the benefit cut.

Grant Thornton?s Mike Warburton has predicted that the higher rate threshold could fall as low as 38,600, if the coalition government makes similar adjustments when implementing its pledge to raise personal tax allowance to 10,000. The Treasury has said there are no further plans to change the higher rate allowance.

Further reading:

Tax concession to soften child benefit blow

Child benefit cut piles pressure on HMRC