High income and child benefit
3 mins
We at DSR Tax Refunds know how difficult it can be to get quality, accurate information about taxation matters and that is why we are here to help. Our helpful guide should tell you everything you need to know about child benefit for those with a high income – after all, you have got better things to do than spend your spare time trawling the internet to find out where you stand. Let our experts put you straight and if you still have questions or want to find out more about our tax preparation services, call our friendly team on 0330 122 9972.
What are HMRC’s rules on child benefit for high earners?
Child benefit used to be what is known as a universal benefit – that means that every household with a qualifying child or children could claim child benefit, irrespective of how much each adult in the household earned. This changed in 2013 and child benefit became a means-tested benefit, which means that only adults with an income below a certain threshold (currently set at £60,000) were entitled to claim child benefit. If any parent in the household had an income between £50,000 and £60,000, they would no longer be entitled to the full amount of child benefit and any overpayment was to be clawed back through changes to taxation.
What is the High Income Child Benefit Charge?
The High Income Child Benefit Charge (HICBC) is the way HMRC deal with people who claim child benefit and have an income over £50,000. It is a tax charge, so it affects the amount of tax you pay, and is the way that HMRC get back the overpayment in child benefit if you are not eligible to claim the full amount.
To be liable to the HICBC, one person in your household has to have an income of over £50,000. If, as a couple, your combined income is over £50,000 but neither one of you earns more than £50,000 as an individual then this tax charge doesn’t apply to you and your child benefit will continue as it always has, with no changes to either of your tax codes.
Are there ways to opt out of it?
If you have an income of over £50,000 and would therefore be liable for this tax charge, you can opt out of claiming child benefit altogether. That way you wouldn’t be paid any of the benefit but you also wouldn’t be liable for any taxation charges.
It only applies if the person’s net income is over £50,000. Net income is the amount of money you earn each year after all your personal allowances and any gift aid amounts that you can deduct are taken into account.
What if you aren’t the person receiving the benefit?
If your partner or spouse receives the benefit, but you are the high earner of your household then we’re afraid that you are the person who is liable to pay the charge. However, you might be able to claim some of that tax back if you are eligible for a tax refund – maybe on your travel expenses or other work-related costs.
If you are a high-earner affected by the HICBC then you could do far worse than give our team of experts at DSR Tax Refunds a call on 0330 122 9972. While you still may have to pay the additional tax charge on your child benefit, we might be able to get you your maximum refund on any travel or work-related expenses to cut down in the total amount you have to pay to HMRC. Call the tax specialists at DSR Tax Refunds and let us help you.