The High Income Child Benefit charge
In order to avoid penalties, HMRC is reminding taxpayers who continue to receive Child Benefit (and earn over the relevant limits) that they need to be registered for Self Assessment if they want to avoid receiving penalties.
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 charged 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 Benefit received. Taxpayers affected by the change have the choice of whether to keep receiving Child Benefit and pay the tax charge through Self Assessment, or may elect to stop receiving Child Benefit and not pay the new charge.