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If they win the election, the Conservatives have promised to give middle-class families a £1.3 billion tax cut by raising the threshold at which child benefit starts.
In a bid to pressure Labour to come on par with them on taxation, the Conservatives plan to raise the High Income Child Benefit tax (HICBC) threshold – which effectively means part of the benefit is repaid – from the current £60,000 to £120,000.
Repayments will be phased out up to £160,000, above which you will no longer be able to receive child benefit – the current phase-out ends at £80,000.
The party claims the measures will provide an average tax cut of £1,500 to 700,000 middle-class families across the country.
The change would see the Conservatives reform tax rates to apply to households rather than individuals.
This means that the inequity of single-earner families shouldering the burden will be eliminated, and parents who are working will be able to earn much higher incomes and continue to receive the full child benefit.
The move is likely to be widely welcomed by parents and will put further pressure on the Labour Party to implement similar policies.
The Conservatives say the tax cuts would cost £1.3 billion from 2029-30 and would be funded by the party’s plans to crack down on tax avoidance, which would raise £6 billion.
The £6 billion funding will also fund a £1 billion national services policy, a £2.4 billion triple lock plus scheme and £60 million for the 30-year New Towns Fund.
Announcing the proposals, Chancellor of the Exchequer Jeremy Hunt said: “Today we’ve announced a £1,500 tax cut for parents to boost families’ financial security and give them more money to spend on the things that matter most.”
“Raising the next generation is the most important job any of us can do, so it’s right that we ease the burden on working families as part of a clear plan to lower taxes.”
The announcement comes after the Conservative government increased the child benefit tax threshold from £50,000 to £60,000 in April, before gradually reducing it to a final level of £80,000.
The changes will see 170,000 families exempt from paying rates and around 500,000 families receive an average of £1,260 in child support payments.
The tax, which requires parents to pay back part of their child benefit if they earn above a certain amount, has been criticized as being unfair – a single parent earning £51,000 a year would have to pay it back, but a couple earning a combined income of £99,000 would not have to.
The Liberal Democrats said the Conservative pledges were “not even worth the paper they were written on”.
Liberal Democrat Treasury spokeswoman Sarah Olney said: “After years of tax increases on hard-working families, the Conservative policies are no longer worth the paper they were written on.”
“Conservative ministers have tried for years to help parents struggling with the cost of living but have done absolutely nothing except increase taxes.
“It makes you wonder, what were they doing all this time?”