High Income Child Benefit charge
The High Income Child Benefit charge came into force on 7 January 2013 and applies to taxpayers whose income exceeds £50,000 in a tax year and who are in receipt of Child Benefit. The charge either reduces or removes the financial benefit of receiving Child Benefit. Where both partners have an income that exceeds £50,000, the charge applies only to the partner with the highest income.
The child benefit charge is levied at the rate of 1% of the full Child Benefit award for each £100 of income between £50,000 and £60,000. For taxpayers with income above £60,000, the amount of the charge will equal the amount of Child Cenefit received. Taxpayers affected by the change can choose to keep receiving Child Benefit and pay the tax charge through Self Assessment, or elect to stop receiving Child Benefit and not pay the new charge.
HMRC is reminding taxpayers who continue to receive Child Benefit (and earn over the relevant limits) to ensure that they are registered for Self Assessment in order to avoid receiving penalties. The deadline for paying any tax owed for 2012-13 falls on 31 January 2014. It is important to note that it can take up to seven working days to complete an online registration for submitting a Self Assessment online.