{"id":4653,"date":"2022-02-04T12:23:03","date_gmt":"2022-02-04T12:23:03","guid":{"rendered":"https:\/\/www.georgehay.co.uk\/blogs\/?p=4653"},"modified":"2023-11-16T16:38:41","modified_gmt":"2023-11-16T16:38:41","slug":"high-income-child-benefit-charge-you-liable","status":"publish","type":"post","link":"https:\/\/www.georgehay.co.uk\/blogs\/2022\/02\/high-income-child-benefit-charge-you-liable\/","title":{"rendered":"High Income Child Benefit Charge \u2013 are you liable?"},"content":{"rendered":"<p>The High Income Child Benefit Charge (HICBC) appears to be hitting headlines again recently, and so we thought it a topic worth revisiting.<\/p>\n<p>The regime is coming under fire for failing to keep up with the times and effectively serve its purpose. Many more families are being forced into the Self-Assessment (SA) system and are losing out on this valuable support.<\/p>\n<p>To blame for this is the static nature of the thresholds coupled with wage inflation, and burdensome administrative requirements.<\/p>\n<p>In addition, the latest Finance Bill gives HM Revenue &amp; Customs (HMRC) the power to use discovery assessments to recoup unpaid HICBC, in cases where a liability exists but has not been declared, and retrospectively so.<\/p>\n<h5>What is Child Benefit?<\/h5>\n<p>Child Benefit is a sum of money, paid monthly, to anyone who is responsible for children under the age of 16 (or 20 if in approved full-time education or unpaid training). In essence, it is the Government\u2019s way of recognising and contributing towards the costs involved in raising a child.<\/p>\n<p>You can claim when the birth has been registered or at the point the child comes to live with you (for adoptive or foster parents). Currently, the benefit amounts to \u00a321.15 for the eldest or only child and \u00a314 for each additional child thereafter.<\/p>\n<p>It is important to note that, where two individuals care for a child, only one will receive the payment.<\/p>\n<p>For the purposes of Child Benefit, partners are considered to be married couples not divorced, and unmarried cohabiting couples.<\/p>\n<h5>Child Benefit and National Insurance (NI)<\/h5>\n<p>Simply by claiming Child Benefit, you\u2019ll also earn National Insurance credits. NI credits count towards contributory benefits, such as your state pension entitlement. To receive full state pension entitlement, you need 35 years\u2019 worth of credits.<\/p>\n<p>Consequently, claiming Child Benefit can be even more advantageous for non-earners or those earning below \u00a3120p\/w (the threshold at which NI credits begin to accrue). If you are the non-earner and your partner is a high-earner, you may wish to be the registrant.<\/p>\n<p>Individuals needing to pay the HICBC must report this liability via a Self-Assessment tax return. This is the case even if they have no need to complete a tax return otherwise. Failing to do so could leave you at risk of significant financial penalties.<\/p>\n<p>Many simply choose not to claim at all, because of this. However, as aforementioned, this may impact entitlement to contributory benefits.<\/p>\n<p>It is possible to claim for Child Benefit, but to opt not to receive the payment; where you do this, you needn\u2019t submit a tax return, but you would still earn NI credits.<\/p>\n<p>At least claiming, will also ensure your child is automatically registered to receive an NI number before they turn 16.<\/p>\n<blockquote><p>\u201cIt is really important that people are aware they can still claim child benefit if their partner earns \u00a360,000 or more, even if they do not actually receive the payment. It\u2019s concerning that many parents are missing out on vital national insurance contributions.&#8221;<\/p><\/blockquote>\n<h5>What is the High Income Child Benefit Charge (HICBC), and do I need to pay it?<\/h5>\n<p>If you (or your partner) earn in excess of \u00a350,000 then the short answer is, yes, you will be liable to pay the High Income Child Benefit Charge. Whilst you can claim for the full amount of the benefit, you will be required to pay a portion of it back if your earnings are between \u00a350,000 and \u00a360,000. If your earnings are over \u00a360,000 all of the benefit will need to repaid.<\/p>\n<p>The amount to be clawed back is calculated based on your adjusted net income. Your \u2018adjusted net income\u2019 refers to total taxable income before any personal allowances and less any relevant tax reliefs.<\/p>\n<p>HMRC do have an <a href=\"https:\/\/www.gov.uk\/child-benefit-tax-calculator\">online calculator<\/a>, which may help you to determine if and how much you\u2019ll need to pay.<\/p>\n<p>The fact it is based on your adjusted net income could mean that, in some circumstances, even though your earnings exceed \u00a350,000, reliefs and tax-deductible expenses once accounted for, could take you below this.<\/p>\n<p>You must pay back 1% of your maximum entitlement, for every \u00a3100 you earn over \u00a350,000. An individual earning \u00a355,000, therefore, would end up paying back 50% of their entitlement. Someone earning \u00a360,000 would be liable to pay back the full amount of the benefit.<\/p>\n<h5>How can George Hay help?<\/h5>\n<p>We can help you to understand if the charge applies to you. If so, we can support you to ensure that any liability is correctly reported to HMRC.<\/p>\n<p>We can also help you to identify whether there may be an opportunity for you to minimise the tax charge and, if appropriate, to point you in the direction of an Independent Financial Advisor.<\/p>\n<p>To talk to us about the High Income Child Benefit Charge (HICBC), give us a call today on 01767 315010.<\/p>\n<p>Alternatively, fill in our <a href=\"https:\/\/www.georgehay.co.uk\/contact-us\">online contact form<\/a> and one of our expert tax advisers from Bedfordshire, Cambridgeshire or Hertfordshire will be in touch.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The High Income Child Benefit Charge (HICBC) appears to be hitting headlines again recently, and so we thought it a topic worth revisiting. The regime is coming under fire for failing to keep up with the times and effectively serve<\/p>\n","protected":false},"author":152,"featured_media":5932,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,229,81,8,789,747,9,230],"tags":[784,785,787,68,213,376,39,786,113,788],"class_list":["post-4653","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-accounting","category-george-hay","category-hmrc","category-personal-taxation","category-rachel-whitby","category-self-assessment","category-tax","category-team-member","tag-child-benefit","tag-hicbc","tag-high-earner","tag-hmrc","tag-income","tag-inflation","tag-national-insurance","tag-parents","tag-self-assessment","tag-state-pension"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>High Income Child Benefit Charge \u2013 are you liable? 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