Commentary

E1.102B High income child benefit charge

Personal and employment tax

E1.102B High income child benefit charge

E1.102B High income child benefit charge

Introduction

The high income child benefit charge (also known as the HICBC) is an income tax charge that is payable by an individual in a tax year in which1:

  1.  

    •     their adjusted net income exceeds £50,000, and

  2.  

    •     either they or their partner receives child benefit

For every £100 by which the individuals's adjusted net income exceeds £50,000, 1% of the child benefit received is levied as the high income child benefit charge. This means that if the individual's adjusted net income in the tax year is £60,000 or more, the high income child benefit charge is entire amount of child benefit received in that tax year.2

The income tax charge is added to the individual's tax liability at Step 7 of the ITA 2007, s 23 income tax calculation. See E1.101B.3

The charge was introduced from 2012/13 onwards, but in the 2012/13 tax year the tax charge was only levied in relation to child benefit received between 7 January 2013 and 5 April 20134.

The high income child benefit charge can be avoided if the individual entitled to receive the child benefit (which may not be the person who pays the charge) makes an election to stop receiving it. Although the election can be made at any time via the GOV.UK website (Stop your child benefit), to prevent a tax charge the election must be made before the start of the tax year.5

Entitlement to child benefit

Child benefit is a non-taxable, non-means tested state benefit payable to

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