Child Benefit UK: This is how tax requirements could end up reducing your claim

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Child Benefit is available to millions of households right across the country. People receive the sum if they are responsible for bringing up a child who is either under 16 or under 20 if they stay in approved education or training. Child Benefit is overseen by HMRC, specifically the Child Benefit Office, who is responsible for ensuring claimants receive the amount to which they are entitled.

Those who receive the Child Benefit sum can expect to be paid once every four weeks, traditionally on a Monday or Tuesday, except for Bank Holidays.

And there is no limit to how many children an individual can claim for, to ensure families receive the correct amount of support.

Child Benefit is split into two separate rates depending on who is being claimed for.

An eldest or only child can expect to receive £21.05 per week, with any subsequent children receiving £13.95 per week.

Therefore, a standard two-child family could expect to receive nearly £1,800 a year in Child Benefit entitlement.

However, while the Child Benefit sum is traditionally tax-free, there may be some who will have to meet certain taxation requirements.

The group who should bear this in mind are high earners, who will be subject to an important Child Benefit related tax.

This is known as the High Income Child Benefit Tax Charge (HICBC) and those who earn £50,000 or over will be subject to it.

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Under HICBC, tax is applied at a taper rate, and so will vary depending on a household’s total income.

The tax has been explained on the government’s website, which reads: “This charge is equal to one percent of a family’s Child Benefit for every extra £100 of income that is over £50,000 each year.

“The amount to pay depends on an individual’s ‘adjusted net income’ and the amount of Child Benefit the claimant is entitled to.”

An adjusted net income is a person’s total taxable income calculated before personal allowances and minus contributions such as Gift Aid.

However, once adjusted net income exceeds £60,000, an important change kicks in.

After £60,000, Child Benefit is taxed at 100 percent, meaning all entitlements are lost.

Some may be uncertain about the amount of tax they are required to pay, but the government has sought to provide further clarity through the Child Benefit calculator.

Accessible through the government’s website, people can input information concerning their salary, tax reliefs and any relevant benefits.

This will then provide them with an estimate of how much they will be required to pay through the tax charge.

Those who are affected by the tax charge may choose not to receive Child Benefit payments at all.

However, these individuals are still urged to fill in the relevant Child Benefit claim form.

While the process may be considered long for some who will ultimately not receive the payment, it could end up being particularly beneficial.

This is because the form helps people to receive National Insurance credits which can count towards a State Pension.

Filling out the form in this way can also be beneficial for the child concerned, who will automatically receive a National Insurance number upon turning 16.

This can be helpful for a number of administrative reasons, including applying for a job.

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