High income child benefit tax charge ― overview

By Tolley
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The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • High income child benefit tax charge ― overview
  • Who receives child benefit?
  • Who suffers the HICBC?
  • Mechanics of the HICBC
  • Notification of liability to the charge
  • Election not to receive child benefit

Introduced with effect from 7 January 2013, the high income child benefit charge (HICBC) acts to clawback child benefit payments where the person receiving the child benefit or their partner earns at least £50,000. The partner with the higher income is the person who suffers the charge.

The rate of the income tax charge is 1% for every £100 by which the adjusted net income exceeds £50,000. This means that complete clawback of the child benefit effectively occurs where the earnings are £60,000 or above.

ITEPA 2003, ss 681B, 681C

If the HICBC is due, the only options open to the individual are to:

  • suffer the tax charge, or
  • elect not to receive the child benefit

For those who are subject to the HICBC (ie those affected who have not elected to no longer receive the benefit) must complete a self assessment tax return. Anyone affected by these provisions who does not yet submit a tax return needs to notify their liability to charge to HMRC by 5 October following the end of the tax year (see below).

This guidance note considers the mechanics of the HICBC. For a discussion of the options open to the taxpayer, the practical implications and the ways in which the charge can be mitigated, see the High income child benefit tax charge ― advising the taxpayer guidance note.

Who receives child benefit?

Child benefit is payable to the person who has responsibility for a child. Only one child benefit payment is made per child. Normally, child benefit is payable until the child’s sixteenth birthday although the benefit period is extended if the child remains in full-time, non-advanced education.

The rate of child benefit depends on the child as follows:

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