Back in 2013 the High Income Child Benefit Charge was brought in by HMRC to withdraw child benefit from high earners. So, if it’s been a long time since you had a child, you might not be aware of this and could feel caught out if it happens to you.
Once either you or your partner earn over £50,000 per year it comes into force. This counts even if someone living with you gets Child Benefit, and they contribute at least an equal amount towards the child upkeep. This is even if the child doesn’t live with you, or is not your own child.
Child Benefit
To give a refresher, you can claim child benefit if you’re responsible for bringing up a child who is under 16, or under 20 if they’re in approved education or training.
Only one person can claim child benefit per child, and by claiming you can get National Insurance credits which count towards your State Pension.
And you still get it when you’re posted abroad too.
What Counts as High Income?
Some people can get caught out by the allowance as their salary isn’t over £50,000, but their adjusted net income is. For example if you leave the Forces on a full pension and then get a paid job as well, or if you’re renting out a property whilst living in quarters.
What Happens When I Trigger the High Income Child Benefit Charge?
You have two choices, you can either continue to receive Child Benefit and then pay any tax charge at the end of each tax year, or stop receiving Child Benefit. Note that you still need to fill out the forms to trigger your child getting their National Insurance number at 16 years old.
We spoke to accountant Caroline Hocking of Mona Accountancy Services and she said: “If you earn between £50,000 – £60,000 per year you need to fill out a Self Assessment form to find out how much your High Income Child Benefit Charge would be.”
The Government Website is great for finding out more information about tax and figuring out if you will earn over £50,000 in a year so be sure to check it out if you have questions.
Please note, we try to ensure the information on this website is correct at time of writing but the information given does not constitute legal advice and are provided for general information.
