Question: I've overheard at work that HMRC is claiming back Child Benefit from people that have earned more than £50,000. Is this correct? I thought everyone was entitled to Child Benefit?
I’m afraid what you’ve heard is correct.
The High Income Child Benefit Charge (HICBC) came into force in January 2013. It applies to taxpayers whose income exceeds £50,000 in a tax year and who are in receipt of Child Benefit. This may be 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.
The term ‘partner’ means someone you are not permanently separated from who you are married to, in a civil partnership with or living with as if you were (cohabiting couples).
The benefit charge works out that you lose 1% of the Child Benefit for every £100 you earn over £50,000. Meaning once you earn over £60,000, you lose the benefit altogether; resulting in repaying £1,076 for one child or £1,789 for two children.
You can choose not to get Child Benefit payments, but you should still fill in the Child Benefit claim form as this will help you get National Insurance credits which count towards your State Pension for the future.
You can either stop claiming Child Benefit, which HMRC have called ‘opting out’, or carry on claiming Child Benefit and pay any tax charge at the end of each tax year. Usually by the way of a Self-Assessment tax return.
HMRC do issue fines for failure to notify them that the charge should be due and this could be up to 100% of the charge. HMRC say that it is your responsibility to notify them of any changes in circumstances which could affect your tax position.
If you would like to discuss your circumstances in greater detail, Ashdown Hurrey can advise on this matter in addition to other tax, accountancy and business matters. Contact Gemma Newstead on 01424 720222 or email her at email@example.com http://bit.ly/2wR9vZE