Do you claim child benefit? Then you may need to file a self-assessment.
With a little over a month to go until the online tax return deadline, HMRC are introducing ‘the high income child benefit charge (HICBC). From 7th January onwards, taxpayers with an income greater than £50,000 who…
10 Minute Read
With a little over a month to go until the online tax return deadline, HMRC are introducing ‘the high income child benefit charge (HICBC). From 7th January onwards, taxpayers with an income greater than £50,000 who also claim child benefit will need to decide whether to stop receiving these benefits, or pay a charge via self-assessment. SimpleTax is here to explain the basics:
Who is affected by HICBC?
Unfortunately, you will be affected by HICBC if any of the following scenarios apply to you:
- Your individual income is greater than £50,000 and you claim child benefit.
- Your individual income is greater than £50,000 and your partner is entitled to receive child benefit.
- Both you and your partner have an income of greater than £50,000 and one of you is entitled to receive child benefit.
Even if the child is not your own, if someone in your household claims child benefit and you have an individual income greater than £50,000, then HICBC affects you.
What to do if HICBC does affects you
If you are one of the unlucky taxpayers affected by HICBC, then you have two options:
- You can choose to keep claiming child benefits – if this is the case, then you MUST declare the amount of child benefit you receive by filing a self-assessment tax return.
- Alternatively, you can choose to opt out of child benefit payments and you will not be required to file a self-assessment (unless you need to for other sources of income). To opt out, you must contact HMRC before 7th January.
If you decide to keep claiming child benefit payments, HMRC will start taxing you from 7th January. But let’s find out how much this is going to cost you.
How does the tax charge work?
How much you pay depends on two things:
- The amount of child benefit you receive.
- Your ‘net’ income.
However, the amount of tax you pay can differ considerably, depending on which category you fall into. The two categories are:
- Income between £50,000 – £60,000: the tax charge will be 1% of the child benefit for every £100 of income which falls between £50,000 – £60,000.
- Income over £60,000: If you fall into this category, the tax charge is 100% of the child benefit you receive.
Whichever option you choose, you must contact HMRC before 7th January, or HMRC will charge you anyway.
Of course, SimpleTax is always here to answer any of your tax-related questions. If you’re sick to death with HMRC, we can help you to file your tax return without dealing with cryptic HMRC forms.
And if you’ve never had to file a tax return before we can help you get your Unique Taxpayer Reference (UTR) number so you’re all ready to file online before January 31st.
Trusted by over 10,000 subscribers
You don't need to be an expert to complete your self assessment tax return.
Managing your finances has never been so easy.
Start you self assessment tax return today for free.Get Started
A Self-Employment Crash Course For Driving Instructors
17 Aug 2020
What You Need To Know As A Buy-To-Let Landlord In 2020
27 Jul 2020
An Essential Guide To Landlord Tax
22 Jul 2020
How GoSimpleTax Works
Simply register for free with your full name and email address.
Select Your Income
Select the income you receive and follow the hints and tips for potential tax savings.
Validate Your Information
Validate your personal information and submit directly to HMRC to get confirmation in just seconds.
Work Anywhere, With Any Device
Gone are the days of fretting over a calculator surrounded by scraps of paper at the eleventh hour.
GoSimpleTax’s tax return software uses the information you upload in real time to calculate your income and expenditure, working out the tax you owe and sending you helpful notifications when there’s the possibility of a mistake.
"The software is intuitive and proved very easy to navigate. I found the whole process refreshingly simple. I saved a lot of money too!"
"Easy to use and value for money. Everything you need to do your tax."
"It fills in all the forms and sends them to the Inland Revenue. Not expensive either. Takes the stress out of doing your tax return online."