Child Benefit – High Income Tax Charge

What is Child Benefit?

If you weren’t already aware, child benefit is financial help from the government, if you are responsible for bringing up a child who is:

• Under 16
• Under 20 if they stay in approved education or training

Child benefit is paid every 4 weeks.

Only one person can claim child benefit.

There’s no limit on how many children you can claim for.

Weekly Rates

Eldest or only child – £21.80

Additional children – £14.45 per child

What if me or my partner earns over £50,000?

Well, that’s where this blog comes in handy.

You may have to pay back some of your Child Benefit in tax if your (or your partner’s) individual income is over £50,000.

This is called the High Income Child Benefit Tax Charge.

Overview

You may have to pay the High Income Child Benefit [tax] Charge, if you have an individual income over £50,000 and either:

• you or your partner get Child Benefit
• someone else gets Child Benefit for a child living with you and they contribute at least an equal amount towards the child’s upkeep

It does not matter if the child living with you is not your own child.

Note: Once you earn £60,000 you lose all of your benefit through tax.

Who pays the tax charge?

If your individual income is over £50,000 and so is your partner’s, then whoever has the higher income is responsible for paying the tax charge.

If your income is over the threshold, you can either:

• get the Child Benefit payments, and pay any tax charge at the end of each tax year on a self-assessment form
• not get Child Benefit payments, and not pay the tax charge

The Gov.uk website has a very handy Child Benefit calculator which can help you get an estimate of how much child benefit you will receive in a tax year and estimate the High Income Child Benefit tax charge you or your partner may have to pay.

www.gov.uk/child-benefit-tax-calculator

How do I pay the tax charge?

You must register for self-assessment, then report the tax you owe on the self-assessment form.

Then pay the tax you owe.

Please Note: If you do not usually send a tax return, you need to register by 5 October following the tax year you need to pay the tax charge.

How can Spectrum help me

At Spectrum we can complete your self-assessment for you!

No need to worry about signing up and reporting the High-Income Child Benefit Tax Charge, because we can do it for you.

If you think that the High-Income Child Benefit Charge applies to you or your partner, p[lease give us a call on 01179 902218 or email us on hello@spectrum-accountancy.co.uk and we can discuss with you how we can help.

We are happy to answer any questions or concerns you may have regarding the High Income Child Benefit Charge, as we know it can be overwhelming at first.

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Categorised in: Accountancy Services, Archived, Child Benefit

This post was written by Daisy Vowles