HMRC has published an updated factsheet informing individuals on when to contact the tax authority about changes affecting child benefits and outlines the high income benefit charge for individuals with income over £50,000
The updated factsheet highlights that if an individual or their partner has an individual income of more than £50,000 per year, then the partner with the higher income has to pay income tax on some or all of the child benefit they receive. This is known as the High Income Child Benefit Charge (HICBC) and came into effect on 7 January 2013.
The government says that people who are eligible for the High Income Child Benefit Charge should still claim child benefit as it can help to protect a state pension and ensures the child will receive a National insurance number.
Nigel May, tax partner at MHA MacIntyre Hudson: ‘Child benefit accrues at the rate of £20.30 per week for the first child in any household and £13.40 for subsequent children. The High Income Child Benefit Charge creates a charge to income tax that claws back this benefit.
‘Once the highest income in a household reaches £60,000, the charge equals the benefit received. Where income is between £50,000 and £60,000, the tax charge operates on a proportional basis. This does have the result of the creation of potentially very high marginal tax rates where income does fall within this band.’
Parents must inform HMRC when circumstances change which can affect the entitlement to child benefits. Some of the changes which can effect child benefit includes: having another child, leaving the UK, the child leaves full time education or moves away, among others.
About your Child Benefit: Factsheet CH1715 is available here.
