Child Benefit Claim
Shankar Devarashetty
Managing Director at Oasis Group (Oasis Accountants Ltd, Oasis Wealth Management Ltd, Oasis Umbrella Ltd)
If your income is more than ￡60,000, and you or your partner receive child benefit, you will be subject to a tax charge to claw back the full amount of benefit the High-Income Child Benefit Charge (HICB). If your income lies between ￡50,000 and ￡60,000, the child benefit tax charge will be equivalent to 1% of the child benefit for every ￡100 of income over ￡50,000. The tax charge applies to the higher earner, irrespective of who receives the benefit
To mitigate the tax charge, you can elect to stop receiving the benefit (while maintaining your entitlement), although ceasing to claim if you are not working can affect your state pension entitlement. Or you can reduce your income below ￡50,000.
Jenni is self-employed with an annual profit of ￡55,000 and she has two children. She currently loses half of her entitlement to child benefit, but by making a gross personal pension contribution of ￡5,000 she would effectively reduce her income to ￡50,000. Anna would not then be subject to any claw back of the child benefit.
Please contact Oasis Accountants for Tax Advice
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