Child benefit can be claimed by most parents but for those on high incomes, certain costs may arise. People may have to pay the HICBC if they have an individual income over £50,000 and either they or their partner gets child benfit or, someone else gets child benefit for a child living with them and they contribute at least an equal amount towards the child’s upkeep.
Claimants who earn between £50,000 and £60,000 per year will have to repay a portion of their child benefit as extra income tax.
One percent of the family’s child benefit will have to be paid back for every extra £100 earned over £50,000.
If either parent has an income of more than £60,000 a year, they’ll have to repay all their child benefit payments.
These repayments are usually paid through a self assessment but recently, a decision from the Upper Tribunal may impact how the process works, affecting thousands of families in the process.
This ruling could have drastic ramifications for child benefit claimants as Kay Ingram, a Public Policy Director at national financial planning group LEBC, detailed.
Ms Ingram said: “While the ruling may be welcome news for the many taxpayers who have paid the HICBC under discovery assessments, the threshold income of £50,100 at which this charge applies is far too low, not having been increased since it was introduced in 2013.
“It hits single parent families particularly hard as it is based on one individual exceeding the threshold, not on total household income.
“It would be timely for the Chancellor to remove this charge in his next Budget as it appears to be causing administrative problems for HMRC and taking money away from children.
Ms Ingram concluded: “In both cases the individual can also benefit from tax relief on the amount given or saved at the highest marginal rate of income tax they pay.
“So doing good or saving for retirement can enable child benefit to be paid tax-free without having to pay the High Income child benefit charge.”
Child benefit itself can be claimed by anyone who is responsible for raising a child who is under 16 or under 20 if they’re in approved education or training.
Claims for eldest or only children will generate £21.15 per week, with additional children bringing in £14.