HMRC And The High Income Child Benefit Charge
Did you even know about it?
POSTED BY HELEN BEAUMONT ON 10/08/2018 @ 9:00AM
If you're claiming child benefit, then you need to be aware of the High Income Child Benefit Charge if your income, or that of your partners, is reaching the £50,000 threshold. You could be penalised as ignorance is no defence ...
If you're claiming Child Benefit and haven't heard of the High Income Child Benefit Charge, you need to look into it as your income approaches or exceeds the £50,000 threshold!
copyright: bowie15 / 123rf stock photo (licensee)
The High Income Child Benefit Charge (HICBC) was introduced in 2012 and HMRC wrote to those people they believed were claiming Child Benefit and either approaching or exceeding that £50,000 limit.
"But they don't inform people as standard now!"
As wages increase, it is possible that your income now exceeds the £50,000 limit and you need to be aware that HMRC will query the Child Benefit payments and claw some or all of them back. The charge is 1% of the child benefit entitlement per £100 of income between £50,000 and £60,000. If your income is in excess of £60,000 all of your Child Benefit will be clawed back.
Now, if you each earn below £50,000 and neither you or your partner has any other form of income then HICBC shouldn't be a problem for you, but if you're unsure then HMRC recommend that you register for self-assessment so you can declare your income and the Child Benefit income and they'll then make a decision on what you owe.
It gets a little confusing here. Who is the partner claiming child benefit? Which partner has exceeded the £50,000 limit? Who needs to register for self-assessment? Is it individual income or household income? If you're in any doubt about this then you need to look into it before HMRC investigate you.
Remember, HMRC don't tell you about HICBC and it's an easy trap to fall into. Although a 20% fine doesn't seem that bad, imagine you have multiple children and you have claimed Child Benefit over multiple years whilst earning more than £50,000? That amount could really add up!
And unfortunately, cases that have gone to court have been awarded to HMRC because the old line of "ignorance of the law is no defence" has been used often in judgements.
"Would you like to know more?"
If you're worried about High Income Child Benefit Charge and how it may relate to your Child Benefit claim then do give me a call on 0333 335 0427 or click here to ping me an email and let's see how I can help you.
Until next time ...
If you're looking to work with an expert tax advisor with a wide range of tax experience, do visit www.essendontax.co.uk to find out more about me and discover how I can help!
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’s specialist knowledge in tax planning and experience ensures 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.