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High Income Child Benefit Charge
Want to get more information about High Income Child Benefit Charge? Here are your questions, answered !
What is High Income Child Benefit Charge ?
High Income Child Benefit Charge also known as HICBC is a tax charge to return Child Benefit received if you or your partner Adjusted Net Income is in excess of £50,000.
Irrespective of who actually receives the child benefit, the HICBC is based solely on the income of the higher-earner individual between couples. It may be possible that HICBC may become applicable to you if your household income is just £50,100 (in case of single earner) or it may not be applicable even if your combined household income is £100,000 (if both partner is on £50,000 each).
How much is the High Income Child Benefit Charge ?
Currently the HICBC charge rate is 1% of Child Benefit received on every £100 extra income over £50,000.
For example, if your adjusted net income is £55,000 and you or your partner in receipt of child benefit for two children ( currently £1,788 annually 2019/20 tax year). Your HICBC will be 50% of £1,788 = £894.
You’d need to pay back full Child Benefit or 100% HICBC applicable if your Adjusted Net Income is over £60,000.
Do I have to pay High Income Child Benefit Charge ?
If you or your partner single adjusted net income is over £50,000 then YES you would need to pay child benefit charge through Self-assessment tax return. Adjusted Net Income is where you may make any tax deductible expenses or pre-tax private pension contributions which will be excluded when reaching your Adjusted Net Income for HICBC purposes.
For example, if your PAYE salary is £60,000 but you made £5,000 private pension contribution. Your Adjusted Net Income for HICBC will be £55,000 not £60,000.
Can I claim Child Benefit if I earn over £50K ?
Yes you can. You may have to pay HICBC but you can still claim Child Benefit.
My Income is over £60,000. Is it still worth claiming Child Benefit ?
Short answer is YES. If you or your partner has an adjusted net income of £60,000 or more, it’s still worthwhile claiming or registering for child benefit entitlement. The very obvious reasons for this is as follows:
- To qualify for full state pension you need at least 30 years of National Insurance contributions. While receiving child benefit you will get those National Insurance credits despite not working. This is ideal for someone where one partner not working due to looking after children.
- It registers your child to receive national insurance number before they turn 16.
How do I pay High Income Child Benefit Charge HICBC ?
HICBC is paid through self-assessment tax return. In order to pay HICBC you’d need to register for Self-assessment and pay your HICBC through self-assessment tax return. As mentioned above, irrespective of who actually receives the child benefit amount it is the responsibility of the high earner to register for self-assessment and report his adjusted net income to pay HICBC through tax return.
What is the deadline of paying High Income Child Benefit Charge ?
HICBC is paid through the self-assessment tax return and the deadline for this is 31st January following the end of tax year.
I have not declared or paid HICBC for previous years !
HMRC seeks to penalise for any previous years outstanding HICBC unless you have a reasonable excuse. We have successfully won many cases for our clients and managed to settle original HICBC charges payable without any penalties. You must act sooner than later and speak to our tax accountant immediately for further advice.
We can assist you from start to finish with reporting your High Income Child Benefit Charge. This includes
- Registering for self-assessment
- Identify your High Income Child Benefit Charge percentage
- Advice you how to mitigate the HICBC
- Penalty Appeal for any outstanding HICBC for previous years
- Preparation and filing of your tax return
Can I get professional help for my HICBC ?
Yes, Total Tax Accountants have experts with great expertise in HICBC. Contact us whenever you need help.