(HICBC) High Income Child Benefit Charge

The High Income Child Benefit Charge is something that we find frequently gets overlooked by clients who have an income of over £50,000 per annum however, it is important to ensure that this is declared to HMRC to avoid any fines and penalties for non-compliance.

If you or your partner have an individual income that’s over £50,000 and you are in receipt of child benefit or someone else gets child benefit for a child who lives with you, and they contribute at least an equal amount towards the child’s upkeep, then you may have to pay the High Income Child Benefit Charge.

It does not matter if the child living with you is not your own child.

To calculate if your income is over the threshold you will need to work out your 'net income' figure. This figure can be arrived at by taking your total income before any tax is deducted, your total income will include but not limited to:

• Income received from employment (before tax)

• Income received from self-employed (net profit before tax)

• Interest received from savings

• Dividends

• Taxable benefits from employment such as company cars & medical insurance

• Income from pensions (before tax)

If you and your partner are in receipt of child benefit, the person who has the highest income pays the charge.

If your income is over the threshold, you can either:

1. choose to continue receiving child benefit and pay the tax charge each year.

2. opt out of receiving child benefit and avoid paying the tax charge.

To pay the tax charge you must register for self-assessment with HMRC and submit a self-assessment tax return each year and pay any tax due.

The charge is equal to one per cent of a family’s Child Benefit for every £100 of income that is over £50,000 each year. If an individual’s income is over £60,000, the charge will equal the total amount of the Child Benefit.

If you are unsure if you need to pay the tax charge we can help with the calculations and if you do need to pay the charge, we can assist with completing your self-assessment tax return and registering you with HMRC for self-assessment.