The high income child benefit charge is a tax charge designed to claw back child benefit where either you or your partner has adjusted net income in excess of £50,000.
It is calculated based solely on the adjusted net income of the higher-income partner in a couple – regardless of who actually receives the benefit, the other partner’s income level or whose child the benefit payments are for. This can lead to problems for couples who prefer to keep their financial affairs separate and confidential. It can also present problems when a couple separates.
A ‘couple’ for this purpose includes two people who are living together as if they are married or in a civil partnership, as well as those who are actually married or in a civil partnership (unless separated).
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 payments if you do not wish to pay the charge and can change your mind at any time.
You will need to do this even if you are employed and earning through PAYE.
Even if you are a family where one partner is earning more than £60,000, it is definitely worth applying.
This is because applying ensures that you don’t miss out on valuable national insurance credits.
You can either:
· Claim the child benefit and pay it back via extra income tax (known as the high income child benefit charge).
· Or register but opt out of the child benefit payments. That way you may avoid having to complete a tax return, yet still get the benefit of national insurance credits.
If you fail to notify HMRC, or you send in a tax return that isn’t accurate, you could face a fine of 10%-30% of the tax owed, plus interest, unless you have a reasonable excuse.
If you disagree with the amount of HICBC you have been charged, HMRC has an appeals and reviews process.
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