Will you be affected by the High Income Child Benefit Charge (HICBC)?

New tax legislation has been introduced whereby if an individual who is entitled to child benefit, or whose “partner” is entitled to child benefit, has “adjusted net income” exceeding £50,000 in a tax year, child benefit is “withdrawn” at a rate of 1% for every £100 above this threshold and is “withdrawn” completely once net income exceeds £60,000.

The “withdrawal” of child benefit is made by way of an income tax charge, namely the High Income Child Benefit Charge (HICBC) as the amount of child benefit payable will be unaffected.

Where both “partners” have income exceeding the limit the charge applies to the “partner” with the highest income.

HICBC applies for tax year 2012/13 onwards and for child benefit entitlement from 7 January 2013.

HMRC has stated that “partner/partners” for this purpose are:

  • a married couple living together;
  • civil partners living together;
  • a man and a woman who are not married to each other but who are living together;
  • a man living with a man or a woman living with a woman who are living together as if they were civil partners.

The amount of the charge will be collected through Self-Assessment and PAYE.

Taxpayers must notify their liability to HICBC although HMRC will be writing to taxpayers with income above £50,000 in the autumn of 2012.

There are complex rules for determining who is liable for the charge in cases where the child does not live with the claimant.

An election can be made not to receive child benefit thereby avoiding a HICBC.

If the above applies to you, and you would like our help, why not get in touch and remember our rates are reasonable and an initial consultation is free!

Buick & Co Chartered Tax Advisers and Tax Consultants take no responsibility whatsoever for this blog, its reliability or any actions you take having read it.

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