Child benefit is a tax-free benefit for parents, but if you or your spouse earn over £50,000, you might need to pay some or all of it back to HMRC – this is called the High Income Child Benefit Charge.
The current year 2021/22 rates are:
• £21.15 a week for your eldest child
• and £14 a week for each of your other children
The person who has the higher income: either you or your partner is responsible for declaring this to HMRC. Please remember that It doesn’t matter who actually received the Child Benefit in their bank account.
What are the pluses and minuses of continuing to claim Child Benefit?
The pluses of claiming Child Benefit:
• You get National Insurance credits – which count towards your state pension (very important if you’re on a low income)
• Your child will automatically receive a National Insurance number just before they reach 16 – they won’t need to apply for one themselves
• Your Child Benefit payments are “protected” in case your income ever drops under £50,270 (because of unemployment, etc.)
The minuses of claiming Child Benefit:
You may have to return some or all of it to HMRC if you are caught by the High Income Child Benefit Charge.
• Continue to receive Child Benefit and pay any High Income Child Benefit Charge.at the end of each tax year
• Stop getting Child Benefit entirely – https://www.gov.uk/child-benefit-tax-charge/stop-child-benefit
• Still fill in the Child Benefit claim form but choose to not get the Child Benefit payments (the best option if you would have to pay High Income Child Benefit Charge.)
With the third option you get all the benefits but you don’t need to worry about filing a tax return or paying the High Income Child Benefit Charge.
You can also restart your child benefit claim at any time if you have previously stopped it.
Should you have any questions regarding Child Benefit an the High Income Child Benefit Charge, please contact your usual SRC-Time account manager.
SRC-Time are one of the South East’s leading accountancy firms in advising on all aspects of business, taxation and corporate finance and we can assist in any issue raised above
Our expert team is available to provide you with advice and can be contacted on 01273 326 556 or you can drop us an email at email@example.com or speak with an account manager to get any process started.