PLANS to remove child benefit from higher-rate taxpayers could be changed to avoid distorting the incentive to work, Deputy Prime Minister Nick Clegg (pictured) said yesterday.
Under current plans, families with one parent earning above the £42,475 threshold will lose child benefit.
That creates a cliff-edge, where a parent just below the threshold will actually lose money if their pay increases.
Clegg said he “will look at” ways to avoid that high marginal tax rate, but maintained it is right that high earners should not receive benefits.
Fellow cabinet minister Ken Clarke backed the Deputy PM, stressing the government is not performing a U-turn on the issue.
One possible change would be to raise the threshold to £50,000 or more.
The planned changes also have the unintended consequence that a family with two working parents each earning £40,000 will keep the payments despite a combined income of £80,000, when a family with one working parent earning £43,000 would not.