You may have heard of the High Income Child Benefit Charge before – maybe you are even one of those people affected by it. Or maybe this is the first time you have heard of it and you want to know if it applies to you. Whatever your situation, our experts at DSR Tax Claims are here to make life simpler for you so we have created this helpful guide telling you all about the charge and whether it applies to you. You can also check out our handy online calculator to see if you are owed a tax rebate, and if you are, call our friendly team on 0330 122 9972 and let us get you your maximum refund fast.
What is the High Income Child Benefit Charge?
The High Income Child Benefit Charge, or HICBC for short, is a tax charge that you pay if your income is above £50,000 and you claim Child Benefit for any qualifying children in your household. If one of the adults in your household, whether it is you or your partner, earns more than £50,000 then that person is liable for the tax charge.
It was introduced in 2013 as a way to account for changes to Child Benefit, which had previously been a universal benefit for any household with a qualifying child or children. After January 2013, any household with someone earning in excess of £60,000 would no longer be eligible for the benefit and those households with someone earning between £50,000 and £60,000 would only be eligible for a proportion of the benefit – the HICBC was introduced by HMRC as a way of clawing back the extra Child Benefit that was paid in excess of that proportion.
The HICBC deducts 1% of your Child Benefit for every £100 over £50,000 you earn.
Who does it apply to?
It only applies if either you or your partner earn more than £50,000 and claim Child Benefit. If you have combined earnings of £50,000 or over but neither of you earns more than £50,000 individually, then it doesn’t apply to you.
It doesn’t make a difference if you are the high earner but your partner is the one who claims Child Benefit – you would still be the one who had to pay the HICBC.
If neither of you earn over £50,000 and neither of you claim Child Benefit, it doesn’t apply to you.
If your income drops below £50,000 you will no longer need to pay the HICBC.
You don’t have to receive Child Benefit, if you would rather not be liable for the HICBC, but you might choose to anyway because you also get National Insurance credits towards your state pension. Expert advice is only a phone call away from our specialist team if you are unsure of your options, so call us on 0330 122 9972 and we can help you sort it out.
How do you pay it?
If you are eligible to pay the charge then you will need to fill in a self-assessment tax return for each year that you claim the benefit. Even if this is the only thing that requires you to fill in a tax return, make sure that you don’t miss the 31st of January deadline for online filing or you will get hit by penalties.
Once HMRC have calculated how much you owe, you can pay in the usual range of ways – by online banking, over the phone with your debit or credit card or in a post office, for example. You might also be able to have it deducted via PAYE – but however you pay, you need to file a tax return.
Of course, the experts at DSR Tax Claims are always available to help you with your self-assessment tax return as well as give you expert advice on how to best manage your tax affairs, including the HICBC. Call our friendly team on 0330 122 9972 and we can help you out.