Child Benefit changes could help parents build a staggering £48,639 nest egg, experts have said.
Following changes announced in the Chancellor’s Spring Budget, the threshold for the High-Income Child Benefit Tax charge will be raised from £50,000 to £60,000 this April.
This means that in the next fiscal year, someone who makes £60,000 who would previously have lost the benefit, will receive all of it.
The benefit will then only be withdrawn completely when people earn £80,000.
However, if those who newly qualify to keep their benefit invest it every month, someone with one child could build a nest egg of £48,639 over 18 years.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Parenting is getting more rewarding, because from April 6, half a million higher-earning parents are set to lose less of their child benefit – and 170,000 will have it all reinstated.”
While the £25.60 a week could be helpful, Ms Coles said investing it in a child’s Junior ISA “could do so much more”.
She explained: “In the coming tax year, Child Benefit rises to £25.60 for the first child, and £16.95 for a second or subsequent child.
“This sort of sum can make a real difference, especially to those on lower incomes, but it can also quickly disappear.
“If there’s a risk it could end up funding the kind of nice-to-haves that are discarded as quickly as last season’s ‘Fortnite’ skins, it’s worth considering how much difference it could make if you put it to work.”
One option is to put the money aside in a Junior ISA to build a nest egg for children to start adult life.
