New High Income Child Benefit (HIBC)
The new High Income Child Benefit charge was introduced by HM Revenue & Customs (HMRC) on
7th January 2013 with the result that higher earners are now liable to this new tax charge if they or their partner has
an individual income which exceeds £50,000 and is also a recipient of Child Benefit.
Who is affected?
According to HMRC’s website you would be affected by High Income Child Benefit if during a tax year any of the following applies to you:
• you have an individual income of more than £50,000 and are entitled to receive Child Benefit
• you have an individual income of more than £50,000 and live (or have lived) with a partner who’s entitled to receive Child Benefit;
• both you and you partner have an income of more than £50,000 per year, you have the higher income and one of you is entitled to receive Child Benefit.
You will also be affected if during a tax year you have an individual income of more than £50,000 and
both of the following apply:
• someone else is entitled to receive Child Benefit for a child who lives with you;
• they’re entitled because they contribute at least an equivalent amount of Child Benefit towards the child’s upkeep, for example to purchase clothes or in providing pocket money;
Please also note that HMRC stresses that it does not matter whether the child living with you is not your own child.
Your income is generally considered the amount of income you receive before tax and deduction of “Personal Allowance”!
Who counts as a partner?
HMRC define a partner, for the purposes of HICB as any of the following:
• a person you are married to and you are living with – or have lived with during a tax year – and not permanently separated from them;
• a civil partner you are living with – or have lived with during a tax year – and not permanently separated from them;
• a person you are living with – or have lived with during a tax year – as if you are married or a civil partner.
Who isn’t affected?
You will not be affected if:
• both you are your partner have an individual income below £50,000 during a tax year;
• neither you or your partner are entitled – to receive Child Benefit.
What to do if you are affected
You will need to choose either of the two following options:
• keep receiving Child Benefit payments but declare the tax charge if you do by completing a tax return each year and registering for Self;
• tell the Child Benefit Office that you want to stop receiving Child Benefit payments – in which case you won’t be liable for the new tax charge and won’t need to complete a tax return for this specific reason.
For more details on High Income Child Benefit visit HMRC’s website at http://www.hmrc.gov.uk/childbenefitcharge/index.htm
or contact your local office who will be able to provide you with more details and a calculation of the tax you will pay.