High Income Child Benefit Tax Charge helpful information

Issues around Child Benefit and the High Income Child Benefit Tax Charge require careful consideration. They involve money paid to parents or guardians who are responsible for bringing up a child in their care.

Who is eligible to claim Child Benefit?

You can claim child benefit if you are responsible for looking after a child who is

  • under 16 or
  • under 20 if they stay in approved education or training.

Only one person can claim child benefit for a child.

Claiming child benefit will help you protect your State Pension, if you are looking after your children and not paying National Insurance. This is because you will receive credits towards your State Pension.

Is Child Benefit Taxable?

Child Benefit itself is not taxable but if you or your partner earns over £50,000 you could be liable for a tax charge known as High Income Child Benefit Tax Charge. The amount of Child Benefit you can claim is not affected. You can still receive this even if to you or your partner even over the threshold.  Although the highest earner would have to pay this back to HMRC via their tax return. However, you can also stop getting Child Benefit, if you are already claiming it by “opting out”.

How much is the High Income Child Benefit Tax Charge?

The amount of the charge will depend on how much over £50,000 your adjusted net income for Income Tax is:

  • If your income is between £50,000 and £60,000, the Income Tax Charge will be 1% of your Child Benefit for every £100 earned. The charge will never be more than the amount of Child Benefit you receive.
  • If your income is over £60,000 the charge will be equal to the full amount of your Child Benefit.

The combined income of two parents or guardians of up to £100,000 is not affected as long as neither of them earns over £50,000 individually. For example if both partners earn £50,000 individually, although their combined income is over £50,000, neither of them earns over £50,000 individually.  They are not liable for the High Income Child Benefit Tax Charge.

The Gov UK website has a calculator where you can check whether or not your adjusted income is over £50,000.

How to pay High Income Child Benefit Tax Charge?

You pay the charge through a self-assessment tax return.  You will therefore need to register for self-assessment and complete a Self-assessment Tax Return each year. We can assist with registering you with HMRC for self-assessment and prepare and submit the return on your behalf.

Assistance

If you require any assistance or need any further information please contact us and a member of our team will be happy to help.

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