HMRC are about to write to taxpayers who they believe will be affected by the High Income Child Benefit Charge.
In Budget 2012, as part of the reforms to the welfare system, it was confirmed that Child Benefit will be withdrawn from households that include certain higher earners.
Although the change applies from January 2013 the calculation to decide whether or not a household is affected by the reform includes the full income for 2012/13.
The legislation imposes a new charge (the High Income Child Benefit Charge) on a taxpayer who has adjusted net income over £50,000 in a tax year where either they or their partner, if they have one, are in receipt of Child Benefit for the year. Where there is a partner and both partners have adjusted net income in excess of £50,000 the charge will apply to the partner with the higher income.
An income tax charge will apply at a rate of 1% of the full Child Benefit award for each £100 of income between £50,000 and £60,000, rounded down to the nearest pound. The charge on taxpayers with income above £60,000 will be equal to the amount of Child Benefit paid.
Further information on the changes and what steps those affected should take can be found at:
Please contact us if you would like any advice in this area.
Internet link: Press release
Posted – 31/10/2012