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HICBC: The High Income Child Benefit Charge Threshold

The threshold was never increased ...

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Posted by Helen Beaumont on 20/04/2022 @ 8:00AM

LITRG, a Low Incomes Tax Reform Group in the United Kingdom, has urged the Government to raise the High Income Child Benefit Charge (HICBC) threshold, helping it to avoid affecting basic-rate taxpayers ...

LITRG called for the HICBC threshold to be increased in the Chancellor's budget in March!

LITRG called for the HICBC threshold to be increased in the Chancellor's budget in March!

copyright: dolgachov / 123rf

But despite pressure from groups such as LITRG, the Chancellor never increased the thresholds meaning any income over £50,000 per year is classed as 'high income' for this purpose, so anyone with adjusted earnings of £60,000 or above has the entire amount of Child Benefit clawed back.

"It's become a bit of a stealth tax!"

The Government believed it would only affect high-income earners from January 2013. The original threshold for the higher rate of tax was £42,475, but since then, this threshold has risen steadily in line with inflation, but the £50,000 threshold for HICBC has remained the same.

In its April 22 Employer announcement HMRC has asked for Employers to help their staff understand their obligations, but as it's not a PAYE issue, I suspect that many employers themselves don’t understand the rules. It gets more confusing when you have to submit your own yearly tax return.

However, it is simple to elect not to receive Child Benefit which means there's no need to report the HICBC on tax returns. Though there is an important distinction between electing not to receive it and not claiming it in the first place.

Claiming Child Benefit is important for non-working or low earning parents and guardians as it secures National Insurance credits for a child under 12 years old and they count towards the State Pension. So, not claiming child benefit because of the admin involved with HICBC can have longer-term consequences.

Dealing with Child Benefit is a confusing issue at the best of times, and for individuals approaching, or even passing, the HICBC threshold, it can be hard to understand how much you can claim!

I recommend anyone who would be classed as a high earner seek out professional advice to ensure they are getting the right amount and don't fall foul of HMRC's eagerness to query every single claim.

Until next time ...



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About Helen Beaumont ...


Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.