Child Benefit tax: High Income Child Benefit Charge means some may face paying hundreds | Personal Finance | Finance
Child Benefit is classed as a tax-free state benefit, however some people will need to pay a tax on the payment. Anyone can claim Child Benefit for a child under 16, or under 20 if they stay in approved education or training, provided they’re responsible for bringing them up, however the tax is income-based.
It’s also important to be aware that only one person can get Child Benefit for a child.
That said, there’s no limit to how many children an individual can claim Child Benefit for.
Households in which a person has an individual income of more than £50,000 will need to be aware of the High Income Child Benefit Charge (HICBC).
This is something which means they may need to pay a tax charge, if they have this individual income and either:
- They or their partner get Child Benefit
- Someone else gets Child Benefit for a child living with them, who contributes at least an equal amount towards the child’s upkeep.
READ MORE: Child Benefit warning as your payment could be halted due to this reason
Those in this situation may be liable to pay the charge even if the child living with them is not their own child.
The High Income Child Benefit Tax Charge is something which Kay Ingram, Director of Public Policy at LEBC Group has spoken about.
She told Express.co.uk: “If you continue to receive Child Benefit and one of the adults in the household has adjusted income of more than £50,099 you will need to pay tax on the Child Benefit.
“This applies, regardless of the marital status of the adults in the household, or their relationship to the child for whom the benefit is payable.
“Once adjusted income exceeds £60,000 it is taxed at 100 percent.
“Where both adults have adjusted income over £50,000 the adult with the higher income is responsible for paying the tax.”
As Ms Ingram explained, those with individual income of £60,000 or more will lose the entirety of the Child Benefit through the tax.
So, how are those with an individual income from £50,099 up to £60,000 affected?
“The tax is charged at one percent of the Child Benefit for every £100 of adjusted income over the £50,000,” she said.
“Those who are only marginally over this should resist the temptation to simply waive the Child Benefit.
“While this is administratively simpler, it means loss of otherwise tax-free income.”
It’s possible to get an estimate of how much a person would receive in a tax year, and how much a person or their partner may face being charged via the tax online, using the government’s “Child Benefit tax calculator”.
How much is Child Benefit?
The rates for this monthly payment depend on who the allowance is for.
Currently, the weekly rate is £21.05 for an eldest or only child.
This adds up to £1,118 over 52 weeks – meaning those affected by the HICBC at the 100 percent rate would need to pay back all £1,118 over the year.
Meanwhile, for any additional children, it is £13.95 per child, per week – equating to £725.40 over 52 weeks.