Are you aware of the Child Benefit arrangements that began in 2013? If not, then you are not alone, 100,000 families have been hit by the High Income Child Benefit Charge for “over-claiming” on their Child Benefit.
Child Benefit is payable to parents who are responsible for 1 or more children under 16 (or under 20 if in approved education or training). £20.70 per week is payable for the eldest or only child and £13.70 per week per child payable for additional children. So, for a family with 2 children, this is £1,788.80 per year.
From 2013, the Government introduced changes where one of the individuals in a household has an income over £50,000. In these circumstances, a High Income Child Benefit Charge may apply. The joint income is not relevant i.e. if a couple earn £49,000 each per year they are not affected by the charge.
If you or your partner earn between £50,000 and £60,000 per year, then the charge you pay is 1% of the Child Benefit you receive for every £100 of income over £50,000 a year i.e. if you earn £55,000 per year then the Child Benefit charge would be 50%. When you earn £60,000 per year the charge is 100% of the Child Benefit.
So, if you or your partner have an income of between £50,000 and £60,000, it is still beneficial to claim the Child Benefit and recommended that you register for self-assessment. Once either income rises to £60,000 per year then it may be best to decide not to receive Child Benefit payments (as you will need to repay this). As a note you can choose not to receive the Child Benefit at any time!
HMRC still recommend you complete the Child Benefit claim form, in the first instance when your child/children are born, even if you decide not to take the payments as,
- It helps you receive National Insurance credits which in turn go towards the State Pension
- It will mean that your child is registered to get a National Insurance number when they are 16 years of age.
Finally, it is you or your partners responsibility to ensure the above is followed otherwise you may have to pay back any Child Benefit that you should not have received plus charges may apply if this occurs.
If you need assistance with this or completing a Self-Assessment then please call us on 0113 286 4486.
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