What is Child Benefit?
Child Benefit is a state benefit that is paid to anyone who has parental responsibility for a child of school age (or younger) or who is under 20 and in full-time (state-funded) education. It is not means tested.
How much is it?
The current amount payable is £20.30 per week for your first child and £13.40 for each subsequent child.
What’s the High Income Child Benefit Charge?
It’s a new tax!
It’s charged as Income Tax to effectively claw back any Child Benefit paid, where a person or that person’s spouse or partner has income of more than £60,000. Where the income is less than £60,000 but more than £50,000, the High Income Child Benefit Charge is an appropriate proportion of the Child Benefit paid.
How is income calculated for the High Income Child Benefit Charge?
In exactly the same way as it is calculated for entitlement to Tax Credits, namely:
- Income; less-
- Losses and Reliefs (such as donations under the Gift Aid scheme and Pension Contributions)
Are there any income deprivation rules?
No.
Is there any planning I can do to reduce the High Income Child Benefit Charge.
Yes.
Where one member of a couple earns more than £50,000 and one earns less, the higher earner will have to pay a High Income Child Benefit Charge. It is therefore sensible to involve both spouses or partners in the business and to share the business income more evenly. In the case of a owner-managers of Limited Companies, it is sensible to not take more out of the company than you need.
My income is way over the limits. Is there anything I can do.
Unfortunately, your only real option to avoid the High Income Child Benefit Charge is to simply elect to no longer receive Child Benefit.
If you are concerned that you or your spouse/partner may be affected by this charge and are unsure of your options, I’ll be happy to talk it through with you.
Paul
