23 January 2014 | Taxation
If you earn more than £50,000 and you or your partner receive child benefit, then you need to take action before the end of January to notify HMRC of your potential additional tax charge.
A new income tax charge will apply to those taxpayers affected by this measure to reduce or remove the financial benefit of receiving Child Benefit. For taxpayers with income between £50,000 and £60,000, the amount of the charge will be a proportion of the Child Benefit received. For taxpayers with income above £60,000, the amount of the charge will equal the amount of Child Benefit received. The amount of Child Benefit payable will be unaffected by the new tax charge.
For taxpayers whose income is between £50,000 and £60,000, the amount of the charge will be one per cent of the amount of Child Benefit for every £100 of income that exceeds £50,000. A taxpayer whose income exceeds £60,000 will be liable to the charge on the full amount of Child Benefit. For example, Child Benefit for two children is £1,752. For a taxpayer whose income is £54,000, the charge will be £700.80 – i.e. £17.52 for every £100 earned above £50,000. For a taxpayer whose income is £62,000, the charge will be £1,752.
More advice is available in the HMRC website, to decide if you want to cease receiving the benefit, or continue and pay the tax.
If you don’t know how much to declare, there is a handy calculator on the HMRC website.
The information provided is for general information purposes only.
Legislation and details may have changed since this was written. The text may not include all matters that are relevant to your individual situation.
You should not make decisions, or refrain from making decisions, without taking further professional advice about your specific circumstances.
31 Lynedoch St.
71 King Street
Main switchboard: +44 (0)141 237 3878
Website by Haiwyre