Posted by Nick Turpin on 12 Nov 2012

Child Benefit: Update on the New Rules

HM Revenue & Customs (HMRC) will be sending out around one million letters this month to families who are likely to be affected by next year’s changes to Child Benefit. The letters outline how the new High Income Child Benefit Charge (HICBC) that takes effect on 07 January 2013 will work.

In summary, the HICBC will apply when a taxpayer or their partner’s income is more than £50,000 in a tax year when they or their partner receive Child Benefit. For those with income of more than £60,000, the HICBC is 100 per cent of the amount of Child Benefit. If the income is between £50,000 and £60,000, the HICBC is gradually increased to 100 per cent of the Child Benefit.

Those affected will need to decide whether to keep receiving Child Benefit and pay the HICBC through a Self Assessment tax return or to stop receiving Child Benefit and avoid the need to pay the HICBC.

Contact us

If you would like to discuss any tax implications of the above, such as filing Self Assessment tax returns or strategies to reduce the impact of the HICBC, please feel free to contact us on 01962 856 990 or customerservice@taxinnovations.com.