Posted by jonathanfullarton - April 11, 2024 7:49 am High-Income Child Benefit Charge

High-Income Child Benefit Charge – changes that might impact you from 6 April 2024

Introduced in 2013, this was the Government’s way of reducing the child benefit that is paid to higher earning parents.  Prior to the Spring 2024 Budget, the charge equated to 1% of the amount of child benefit for each £100 of income between £50,000 and £60,000.

The ‘tax on children’ charge as it has been labelled has often been considered unfair, as a household with one individual earning £60,000 would not be entitled to any child benefit, yet a couple with earnings of just under £50,000 each would be entitled to keep the whole amount.  The Government has accepted that this is not equitable and plans to introduce a new system based on household income by April 2026.

In the meantime, the threshold at which the charge commences will be increased from £50,000 to £60,000 and the rate at which the child benefit is clawed back will be halved, so people will not lose all their entitlement unless their income exceeds £80,000.

These changes apply from 6 April 2024 onwards.  If you have previously opted out of receiving child benefit to avoid the charge because you were earning over £60,000, you should review your position to establish if the child benefit payments should be restarted.

One further piece of good news is that the government has said that in future, those affected by the charge will not need to register for Self Assessment and complete a tax return.  Instead, the High-Income Child Benefit Charge will be collected through an adjustment to your PAYE tax code.

If you have any queries concerning the High-Income Child Benefit Charge and how the changes might impact your family, please get in touch with your usual MFW adviser for further advice.