The 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 will apply to the partner with the highest income.
The Child Benefit charge is calculated as 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 Benefit received. Taxpayers affected by the charge can continue to receive Child Benefit and pay the tax charge through Self Assessment, or elect to stop receiving Child Benefit and not pay the new charge.
HMRC has advised taxpayers who continue to receive Child Benefit (and earn over the relevant limits) that they should registered for Self Assessment so that the correct High Income Benefit Charge can be applied. In order to avoid penalties the deadline for registering for Self Assessment (for taxpayers not already registered) is 5 October 2013 for the 2012-13 tax year. Taxpayers who elected to stop receiving Child Benefit payments before 7 January 2013 are not required to take any further action.
We can help readers affected by these changes, and who need help registering and filing a Self Assessment return. Please call if you need our assistance.