Families with higher incomes are set to see a change in how they repay their Child Benefit in the summer.
Child Benefit is a payment provided to a person responsible for raising a child. However, if your income surpasses a certain limit, you must repay a portion of your Child Benefit.
If either you or your partner’s earnings exceed £60,000, you’re required to repay 1% of your Child Benefit for every £200 earned above this threshold.
Once your income crosses the £80,000 threshold, all your Child Benefit must be repaid. This is known as the High Income Child Benefit Charge.
Usually, this charge is settled through self-assessment. However, soon there will be an alternative to pay it via your PAYE tax code.
HMRC will inform families when the new digital system is introduced, which is believed to be this summer.
The option to pay the High Income Child Benefit Charge through self-assessment will still be available. In the 2022/23 tax year, 440,000 people paid a total of £525 million in High Income Child Benefit Charge, reports the Mirror.
This charge is applied to an individual, meaning that if you’re part of a couple, both of you could earn up to £59,000 without being subject to the charge. You can claim Child Benefit without receiving the payments, in order to get National Insurance credits towards your state pension if you wish to avoid the charge.
The High Income Child Benefit Charge was previously set at an annual income of £50,000 before repayment begins, but this has been raised to £60,000 for the current tax year. Over seven million families claim Child Benefit.
Who can claim Child Benefit?
Child Benefit can be claimed if you’re responsible for a child under 16, or under 20 if they are still in approved education or training. This can cover A-Levels, NVQs and even home schooling, but does not include university or BTEC qualifications.
Typically, the child needs to live with you, or you contribute at least the equivalent of Child Benefit towards their upkeep. If you’ve fostered a child and the local council isn’t contributing towards their accommodation or maintenance, or if you’ve adopted your child, you’re eligible to claim Child Benefit.
You may also qualify if you’re caring for a child on behalf of a friend or relative. There’s no limit to the number of children you can claim Child Benefit for, but only one person can claim Child Benefit if two people care for a child.
Child Benefit is issued every four weeks by HMRC, typically on a Monday or Tuesday.
