Child benefit cut 'could cost some families £50,000' Families with three children stand to lose more than £50,000 from January 2013 until the youngest child's 18th birthday. Photograph: Parkerphotography / Alamy The government's cuts to child benefit could cost a family with three young children more than £50,000 by the time the children reach the age of 18, according to analysis by accountants PwC. The firm's calculations are based on a family with three children aged five, three and one, where at least one partner earns £60,000 or more. The analysis runs from when the cuts are implemented in January 2013 to the youngest child reaching his or her 18th birthday. The calculations also incorporate PwC projections of consumer price inflation and long-term inflation expectations, based on the Bank of England's target inflation rate of 2% per annum. Families with two children aged one and three stand to lose nearly £40,000 over the same time period. Child benefit payments are tax-free and amount to £20.30 a week for the first child and £13.40 for each subsequent child. More than a million families are about to start receiving letters from HMRC telling them they will lose some or all of the child benefit they currently receive. From January 2013 households receiving child benefit where one parent or partner earns more than £50,000 will be hit with a new income tax charge. This tax, applied at the rate of 1% of the amount of child benefit for each £100 of income between £50,000 and £60,000, means that those earning above £60,000 will effectively receive no benefit at all. Alex Henderson, tax partner at PwC, said: "Many people affected by the child benefit cuts have probably not considered what the true cost will be to them over time. Our projections show the cost could be substantial, and could ultimately mean many middle-income families have to work longer until retirement or until they can pay back debts. Those parents still wanting to receive child benefit will also face the burden of filling in a self-assessment tax return, regardless of whether they pay income tax through PAYE. The Treasury says that 85% of all families with children will be unaffected by the cuts, which are targeted at higher income families in the UK. However, the Institute of Chartered Accountants in England and Wales has pointed out that families whose main earner has moved overseas to work - and whose earnings are taxed abroad - will not face the same loss of benefit. HMRC says only the income of the person living in the UK will be taken into account when it decides whether a household's child benefit should be reduced. Some media sources have also reported the changes may be illegal under EU law because it could lead to discrimination between some EU citizens working in the UK, with some facing the cuts while others working in the same job do not. However, HMRC has insisted the legislation was "fully compliant with EU law."