Last reminder for parents with income in excess of £50,000

Last reminder for parents with income in excess | Accountants in Sheepstor | Accountants in Buckfast | Accountants in Combe Martin | Accountants in Crossways | Accountants in West Chelborough

Last reminder for parents with income in excess of £50,000

Parents could be liable for the High Income Child Benefit tax charge if either partner’s income exceeds £50,000 and you are in receipt of child benefit. The charge effectively claws back the financial benefit of receiving child benefit either by reducing or removing the benefit entirely.

If you or your partner have exceeded the £50,000 threshold for the first time during the last tax year (2018-19), then you must act: in particular, you may need to file a tax return. If both you and your partner have an income that exceeds £50,000, the charge will apply to the partner with the highest income.

If you continue to receive child benefit (and earn over the relevant limits), you must file a tax return and pay any tax owed for 2018-19 on or before 31 January 2020. If you were not within the Self-Assessment system then you should have notified HMRC by 5 October 2019 of your liability to the High Income Child Benefit tax charge. If you have missed the deadline or do not file your tax return by the deadline you may be charged a penalty.

The child benefit charge is charged at the rate of 1% of the full child benefit award for each £100 of income between £50,000 and £60,000. If you or your partners income exceeds £60,000, the amount of the charge will equal the amount of child benefit received.

If the High Income Child Benefit charge applies, it is usually still beneficial to claim Child Benefit for your child as this can help to protect your State Pension and will make sure your child receives a National Insurance number. However, you have the choice to keep receiving child benefit and pay the tax charge or you can elect to stop receiving child benefit and not pay the charge. Please let us know if you need any advice or assistance in registering with HMRC.

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