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Child Benefit is a payment which can be claimed in order to help with the costs of raising a child. However, individual income which is in excess of £50,000 can have an impact on how much is received.
This is due to the High Income Child Benefit Charge – something which taxes the payment at one percent for every £100 that individual income exceeds £50,000 per year.
As such, once income is over £60,000, the entirety of the Child Benefit is lost through the tax.
For those affected, it may be that they need to fill out a Self-Assessment Tax Return.
However, there is another option – although there is a need to act fast should a person want to access it this year.
It’s something which Kay Ingram, Director of Public Policy at financial planning group LEBC has highlighted.
The chartered financial planner has warned today is a significant date for parents when it comes to making changes in connection with the support they receive in caring for their children.
That’s because today – Monday October 5, 2020 – marks the deadline for parents who are in receipt of Child Benefit to register with HM Revenue and Customs (HMRC) if they want their HICBC tax to be assessed through adjustment of their tax code, rather than needing to file a self-assessment return.
“Parents where either have income in excess of £50,099 pay tax on Child Benefit,” commented Ms Ingram.
“Child Benefit is payable at £21.05 for the eldest child and £13.95 per week for younger children under 16 or still in full time education up to age 20.
“The Benefit is taxed at one percent for every £100 that their income exceeds £50,000 pa [per annum] so that once income is over £60,000 the whole benefit is taxed at 100 percent.
“Some parents choose to waive the Benefit to avoid the tax charge.”
Amid the ongoing coronavirus crisis, some may no longer be affected by the tax charge, as Ms Ingram explained.
“This year many parents may have seen their income disrupted as a result of a loss of earnings triggered by lockdown,” she said.
“They may no longer have to pay the tax and those who have waived Child Benefit may wish to claim it again.
“Payment can only be backdated for three months, so claiming sooner rather than later is clearly sensible.”
Ms Ingram was speaking ahead of the release of the newly updated edition of LEBC’s Gender Pension Gap Guide.
In the guide, Child Benefit recipients are reminded that the claim can also enable them to earn credits for their state pension entitlement.
This is something which can be gained until their youngest child reaches 12 – or 17 is the chid is disabled.
“Non-working parents with children born after April 2013, who’ve waived Child Benefit should complete form CH2 to claim state pension credits,” the guide suggests.
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