The High Income Child Benefit Charge (HICBC) has been a controversial topic since its introduction in 2013. The charge was introduced to ensure that high-earning families do not receive child benefit, which is meant to support low and middle-income families ...
Always seek professional tax advice when dealing with the High Income Child Benefit Charge!
However, the previous income threshold of £50,000 was considered by many to be too low, resulting in a significant number of families losing their child benefit. In response to this, the UK government has announced changes to the HICBC in the 2024 Budget, increasing the income threshold to £60,000.
Under the new rules, families with one high-earning parent earning between £50,000 and £60,000 will now be able to receive child benefit in full!
This means that families with one parent earning up to £60,000 will no longer be subject to the charge. However, for every £100 earned above the threshold, 1% of the child benefit will be taken away. This means that families with one parent earning £70,000 will receive half of the child benefit, and those earning £80,000 or more will not receive any child benefit.
The government claims that these changes will benefit over half a million families, but critics argue that it still penalises families with one high-earning parent. They argue that a family with two parents earning £50,000 each will still receive the full child benefit, while a family with one parent earning £80,000 will not.
"This has led to calls for a more fair and equal approach to the HICBC!"
The HICBC has also been criticised for its complexity and the administrative burden it places on families. Many parents have expressed frustration with having to complete self-assessment tax returns to declare their income and pay the charge. The new changes are expected to simplify the process for families, as fewer people will be affected by the charge.
One of the main concerns with the HICBC is its impact on working mothers. Many women who choose to reduce their working hours or take a career break to raise children often rely on child benefit as a form of support. The previous income threshold of £50,000 meant that many mothers had to choose between working and receiving child benefit. The increase to £60,000 is a step in the right direction, but some argue that it still does not fully support working mothers.
The changes to the HICBC have also raised questions about the overall fairness of the UK tax system. While the government claims that the HICBC is necessary to ensure that child benefit is targeted towards those who need it most, others argue that it unfairly penalises families with one high-earning parent.
"I feel that the new changes have not fully addressed this issue!"
The changes to the High Income Child Benefit Charge in the UK Budget 2024 have brought some relief for families with one high-earning parent. The increase in the income threshold to £60,000 will benefit over half a million families, but it has also sparked debates about the fairness of the system.
While the changes have simplified the process and reduced the administrative burden, it still remains a complex and controversial issue.
Always seek professional tax advice when dealing with the High Income Child Benefit Charge.
Until next time ...
HELEN BEAUMONT
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about the new cap on the High Income Child Benefit Charge, it may be a great idea to call me on 01908 774323 and let's see 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 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.
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