Introduced by former Chancellor George Osborne from January 2013 this unpopular tax clawback of the Child Benefit continues to provide an unwelcome additional tax bill for certain families.
If you or your partner get Child Benefit or someone else gets Child Benefit for a child living with you and they contribute at least an equal amount towards the child's upkeep, if you have an individual income of £50,000 pa you will be affected. It doesn't matter if the child living with you is not your own child.
A few important things to remember if you're trying to work out if it's worthwhile continuing to claim Child Benefit:
- The test is whether an individual in the household has income in excess of £50,000 per annum
- The HICBC will be made on the individual with the highest income.
- Income includes not only earnings from employment but dividends, income from lettings and any other taxable source.
- The tax clawback begins once your income reaches £50,000 and results in a complete clawback once your income reaches £60,000.
- HMRC have an online calculator to help you work out the clawback. Please click here for more information.
- You can opt out of claiming Child Benefit if you don't think it's worthwhile. Again you can do that online, please click here for more information.
- If your circumstances change and your income reduces you can restart your Child Benefit.