You may be liable to this new tax charge if you, or your partner, have an individual income of more than £50,000 and one of you gets Child Benefit or contributions towards the upkeep of a child.
Want to opt out of child benefit to avoid the High Income Child Benefit Charge in 2013/14?
From 7 January 2013, families in which someone has income over £50,000 and someone receives child benefit may have to pay some or all of it back through the High Income Child Benefit Charge.
Before you decide to stop your payments
Before you stop your payments it’s worth knowing the following:
- If your, or your partner’s, individual income is between £50,000 and £60,000 you might not want to stop Child Benefit payments. This is because the tax charge will always be less than the amount of Child Benefit.
- If your, or your partner’s, individual income is more than £60,000, the tax charge will always be the same as the amount of Child Benefit, so you may want to stop the payments. But there are some income adjustments that may apply, such as pension contributions, which could bring your income level down to below £60,000. This could reduce your tax charge.
You can check the likely tax charge by using an online calculator if you haven’t already done so. Only use this calculator if your income is more than £50,000 and your income is higher than your partner’s.
Remember that the claim to opt out must be made by the person who is entitled to receive the child benefit or their registered agent. Also, note that the decision to stay in or opt-out of receiving child benefit is not final and families are free to change their minds in future if their circumstances change.
If you would like any advice on this matter, please do not hesitate to contact us.