Worried how your salary could affect your Child Benefit claims?
If you claim Child Benefit, or you’re about to make a claim, it’s important to be aware of the High Income Child Benefit Charge. This is required to be paid if you or your partner earn over £50,000 – and you’ll need to let HMRC know.
We spoke to HMRC, to find out everything you need to know about the High Income Child Benefit Charge, and their advice on how to ensure you’re paying the right amount:
Am I eligible to receive Child Benefit?
You’ll get Child Benefit if you’re responsible for a child who is under the age of 16, or under the age of 20 if they remain in education or training.
Child Benefit is paid at a weekly rate of £20.70 for the first child and £13.70 for each additional child. You’ll receive it every 4 weeks.
Only one person can claim per child.
How can I claim child benefit?
If you haven’t filled in a Child Benefit form, make sure you do as soon as possible.
You’ll also need to get in touch with HMRC if your circumstances change, or if you need to add a child to an existing claim.
HMRC can backdate your claim by three months, and completing the form can help protect your State Pension, as you will get National Insurance credits until your child turns 12.
If you’ve taken a break from work to look after your child, or don’t earn enough to pay National Insurance contributions, Child Benefit can also help you qualify for these credits.
What is the high income child benefit charge?
The ‘High Income Child Benefit Charge’ (HICBC) is a tax charge which applies to anyone with an income over £50,000, who claims Child Benefit or whose partner claims it.
Pension contributions and payments to charities are not included in your income, but your salary and taxable benefits-in-kind (such as a company car) are.
How much is the HICBC?
The tax is 1% of Child Benefit for each £100 of income over £50,000. If your income is over £60,000 the total HICBC will be equal to the Child Benefit you receive.
Even if you do have to pay the charge, you could still be better off by claiming Child Benefit.
To work out how much you may have to pay, use the Child Benefit tax calculator.
You and your partner have two children and get £1,788.80 a year in Child Benefit payments. You are employed and your income is £55,000 a year after pension deductions.
Your partner stays at home to care for your two children.
The Child Benefit tax calculator confirms your HICBC is £894.40 – which equates to 50% of the Child Benefit you receive.
To ensure your partner receives the associated National Insurance credits to protect their State Pension, they make the claim themselves.
What do I need to do?
There are a few steps you will have to take to pay the HICBC:
- Check your annual income either on your P60 or through your personal tax account
- Use the child benefit tax calculator
- Notify HMRC and register for Self-Assessment by 5th October. You only need to register for Self-Assessment once
- Complete a Self-Assessment tax return by 31st January, and pay what you owe each year
Can I opt out?
If you don’t want to pay the HICBC, you can opt out of claiming Child Benefit payments. This means you won’t have to pay the charge but you’ll still protect your State Pension.
For more information, read HMRC’s advice on how to stop getting Child Benefit.
How do I find out if I’m affected by the HICBC?
You can find out if you’re affected by the HICBC by looking into your personal finances.
If you have a partner, their income should also be taken into account, and the highest earner will be eligible to pay the charge – even if the other partner is the person claiming Child Benefit and receiving the payments.
If you don’t know your partner’s income, you can contact HMRC to find out who’s the highest earner.
Want to find out more?
To find out more about the High Income Child Benefit Charge, visit the HMRC website.
You can also contact them directly to ask any questions you may have, report changes, or send a general enquiry about your Child Benefit.
*All information was correct at the time of writing. Please visit https://www.gov.uk/child-benefit for more details.
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