High income child benefit charge

The high income child benefit charge is a clawback of a state benefit through the self-assessment tax system. It is a controversial and unpopular tax that has caught out many an unsuspecting claimant/partner of this benefit.

The charge applies where a parent/guardian is claiming child benefit for their child and either their own or their partners’ income is more than £50,000. The charge applies to the higher earner in a couple. A ‘couple’ for these purposes 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.  

The charge is set at 1% of the child benefit received for each £100 over the £50,000 limit. Where income exceeds £60,000 a year, all the benefit will be clawed back.

The £50,000 income threshold has never been increased since the introduction of this tax back in 2013. The limit also only focuses on single income levels, so if a couple each earn £49,950 they will be entitled in full to child benefit, however if one of them earns £60,000 and the other £39,900 no child benefit is due despite the joint income being the same!

There is a requirement to register for self-assessment where this charge is payable, even if your taxes are collected via the PAYE system. Failure to register for self-assessment will result in penalties being issued.

Please make us aware if you or your partner are in receipt of child benefit so that we can properly advise you on whether this charge is payable.  

Please contact Karen Keeling if you require further assistance.