Hidden tax trap: How one-income families lose thousands in child benefits
Labour party drops plans to fix unfair child-benefit system that hits single-income homes harder than dual-income ones. The decision affects about 700000 families who could have saved £1500 each
This week Labour dropped the child-benefit system changes that could have helped many one-income families‚ The current setup gives parents £25.60 weekly for their first child and £16.95 for others but its not that simple
The systems weird rules mean two parents earning £59000 each (total £118000) keep full benefits while one parent making £61000 gets nothing — a setup thats especially hard on single-parent homes and stay-at-home parent families. The high-income benefit charge creates a cliff-edge effect that many find un-fair
The reversal is unfair and unjust for single parents and single-earner families
Martin Lewis and financial experts say this choice hurts one-income homes the most. Victoria Benson from Gingerbread points out that single parents must cover all costs from just one income; Europe has better family-friendly tax rules
There is a work-around: salary-sacrifice into pensions can help. A parent earning £75000 could get £16000 in child-benefits by putting £400 monthly extra into their pension — this also adds £167364 to retirement savings by age 68 (with 2% growth after fees)
