In 2013, the Government introduced the High Income Child Benefit Charge (HICBC). Despite extensive publicity, many people did not realise it was going to affect them ...
Of course, people's circumstances change with new children or increases in income beyond the £50,000 threshold, and that's why I feel it is important to talk about the High Income Child Benefit Charge once more.
If you receive Child Benefit, HICBC is collected via a self-assessment tax return from the highest-earning spouse where one of them (or both) earns over £50,000. In this tax year, the band is £50,270, so for the first time, many basic rate taxpayers now fall under HICBC.
Something worth noting here is that individuals do not need to be married or even civil partners. This means that any cohabitees and even estranged married couples may also be caught by the High Income Child Benefit Charge.
HICBC takes 1% of any Child Benefit received for every £100 of income received by the highest earner over £50,000. This means that any individual with an income of £51,000 loses 10% of their Child Benefit. So, a person with two children receiving £1,855 will have £185 clawed back due to HICBC in the 2021/22 tax year.
This would mean you avoid the High Income Child Benefit Charge completely, but this could possibly affect future pension entitlements, so you should establish the right to claim Child Benefit, but ensure you do not get it paid to you.
If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.