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High Income Child Benefit Charge (HICBC): A Complete Guide

Everything You Need to Know about High Income Child Benefit Charges (HICBC)

Are you a parent? Or do you have a child living with you? We guess you get the Child Benefit payments then. Do you know that if your Adjusted net income over £50,000, you are liable to pay for some or all the Child Benefit payments? Yes, you have heard the right!

While living in the UK, and you or your partner has an annual net income individually more than £50,000, a High Income Child Benefit Charge (HICBC) occurs. Also, if you or your partner gets the child benefit, you are liable to make the payments, even if the child living with you is not your own kid.

Now, your question may be, who will pay the tax charge, right? For this answer, the best thing you can do is read this blog for a clear idea of the High Income Child Benefit Charge (HICBC), including the total taxable income and other facts. And finally, visit a professional tax consultant nearby to make sure of all the rules so you don’t have to face penalties later.

Everything You Need to Know about High Income Child Benefit Charges (HICBC)

As mentioned, you may have to pay for the High Income Child Benefit Charge (HICBC) if your partner or you have an individual Adjusted net income over £50,000 or any of you is a recipient of Child Benefit payments.

Now, with these conditions applied, you (when you are the recipient) and your partner need to decide jointly, whether you should stop getting Child Benefit payments to avoid paying the tax charge or continue receiving the amount and pay for it via Self-Assessment.

If you continue getting Child Benefit payments, learn who will pay their tax charge at the end of every tax year. If the conditions are that both you and your partner earn more than £50,000, the one having the higher Adjusted net income will pay.

Note: Here, partner means the person you are married to, living with or in a civil relationship, not separated permanently.

What Is Considered a Total Taxable Income?

Now, speaking of the net income, you should know what counts as an income in this case. In the matter of High Income Child Benefit Charge (HICBC), your adjusted net income will be the total taxable income, excluding Gift Aid and allowances, while including interest from dividends and savings.

Can the Tax Charge for High Income Child Benefit Increase?

Yes, it can. According to the UK Government, the High Income Child Benefit Charge (HICBC) will increase gradually with your increased annual income. For example, when you earn between £50,000 and £60,000, the charge drives up, which is equal to 1%of one family’s Child Benefit payments for every £100 of annual income over £50,000 every year. However, the tax charge will be less than the total ChB amount. That’s why many recipients or parents decide to continue getting the Child Benefit payments and pay the HICBC.

Everything You Need to Know about High Income Child Benefit Charges (HICBC)

But, in case you earn more than £60,000 annually, the tax charge will be equal to the total Child Benefit amount. In this condition, you and your partner can decide to opt out of getting ChB payments to avoid paying the tax charges.

Note: Even after you stop getting the child Benefit payments, you have to pay the tax charge on the ChB amount you got. Moreover, when you decide to opt out of receiving ChB payments, your ChB claim will remain active unless the circumstances change. By claiming ChB, you can earn National Insurance credits counted as your State pension, while your child will get a National Insurance number before 16 years without making any application.

In Conclusion

We hope this guide will remain helpful for you to understand the High Income Child Benefit Charge (HICBC). Now, if you need expert help to learn all the rules related to tax charges or require tax services nearby, count on us. At Tax first consultants ltd, our experts help with not just self-assessment tax returns for individuals & self-employed people and HMRCs’ investigation but preparing year-end accounts, bookkeeping using software, payroll, tax planning and much more.

Call us today for a consultation, or click here for a live chat now!

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