Conservatives Promise Tax Cut for Parents in Election Campaign
On Friday, the Conservative party announced a new policy that would provide a tax cut for parents by raising the threshold for when families have to pay a levy on their child benefit.
Under the current system, if either parent or their partner earns more than £60,000, they are subject to the high income child benefit tax charge. Additionally, once a salary reaches £80,000, the benefit is completely withdrawn. However, if the Tories win the election on 4 July, they have promised to increase the threshold to £120,000 before any tax is paid and to £160,000 before the benefit is withdrawn. This change will also base the threshold on household income rather than individual income.
Chancellor Jeremy Hunt claims that this policy will result in an average tax cut of £1,500 for approximately 700,000 families. He believes that this change will “boost families’ financial security and give them more money to spend on the things that matter most”.
However, the Labour party has criticized the announcement, calling it “another chaotic scattergun announcement” from Rishi Sunak. They add that it is one of many “desperate and unfunded policies” that cannot be delivered.
This new policy follows the government’s decision in April to raise the threshold for when the high income child benefit tax charge kicks in from £50,000 to £60,000. The Conservative party estimates that the new £120,000 policy will cost £1.3bn by 2029 and will be paid for by clamping down on tax avoidance, a measure they have promised to use throughout the campaign that is expected to raise £6bn.
The Tories state that this change will “end the unfairness” that allows single-earner households to start paying the tax charge, while households with two working parents and a higher total income can keep the child benefit in full. However, this policy will not come into effect until autumn 2025 due to the significant reform of HMRC procedures that would need to take place first.
Chancellor Hunt stated, “Raising the next generation is the most important job any of us can do, so it’s right that, as part of our clear plan to bring taxes down, we are reducing the burden on working families.”
A Labour spokesperson responded, “Rishi Sunak clearly wants to pretend the last 14 years didn’t happen, because almost all his policies reverse decisions his own party has taken. The choice at this election is five more years of Conservative chaos or stability with a changed Labour Party.”
The SNP’s David Linden also criticized the policy, stating, “The Tories’ time is up – and no amount of desperate, last-minute policy announcements will stop the democratic drubbing that is coming their way.” He added that the people of Scotland can see through the Tories’ empty promises, as they have only delivered austerity cuts, Brexit, and a cost-of-living crisis.
In addition to the Conservatives’ policy, the Liberal Democrats announced their own plans to support parents. They promise to double statutory maternity pay to £350 a month and introduce a “dad month” of paid leave for new fathers. They also pledge to make paid parental rights available from day one of a job and extend them to self-employed parents.
Lib Dem leader Sir Ed Davey stated that these proposals will “give new parents the choice and flexibility they need, backed up by a package of proper support.”
Meanwhile, the Labour party will focus on their housing strategy, including making the mortgage guarantee scheme permanent and building 1.5 million homes over the next parliament.
