On 7 January 2013, a new income tax charge was introduced. It is payable if you have an individual assessable income for income tax of over £50,000 and you or your partner get Child Benefit.
The amount of Child Benefit you can claim and receive is not affected. It can still be paid to you or your partner even if one of you will then have to pay the income tax charge.
How much is the charge?
The amount of the charge will depend on how much over £50,000 your assessable income for Income Tax is:
• If your income is between £50,000 and £60,000, the income tax charge will be 1% of your Child Benefit for every £100 of income between £50,000 and £60,000. The charge will never be more than the amount of Child Benefit you receive.
• If your income is over £60,000 the charge will be equal to the full amount of your Child Benefit so you are no better off for receiving the benefit.
Couples can have a combined income of up to £100,000 and not be affected, as long as neither of them has an individual income of over £50,000. For example, if two members of a couple are each earning £45,000 they will not be affected by this income tax charge.
Any charge you have to pay will be based on your assessable income for Income Tax – that is, your taxable income after any allowable reliefs you may be able to claim (such as reliefs for pension contributions or charitable donations).
Gov UK has a Child Benefit tax calculator (link opens in a new window) and also has information about the various sorts of Income Tax reliefs you may be able to claim (link opens in a new window).
How is the charge paid?
The charge is paid through a self-assessment tax return. It is your responsibility to make sure that you pay this tax even if you are not contacted by HMRC.
You can decide not to receive Child Benefit if you do not wish to pay the charge and can change your mind at any time.
You will remain entitled to Child Benefit, even if you choose not to have it paid. This is in order to protect your entitlement to national insurance credits (Carer’s Credits), which can count towards your State Retirement Pension entitlement.
For more information, see the HM Revenue and Customs information on the Child Benefit income tax charge