Child benefit - do I have to pay any back?

Child benefit - do I have to pay any back?

Child Benefit was previously a universal, non means tested benefit, meaning that all parents were able to claim it, however in 2013 this changed, and the High-Income Child Benefit Tax charge was introduced, meaning that any individual with an income over £50000 would need to pay back all or part of child benefit received.

The tax was, and remains controversial, as a single adult household with an income of over £50000 will need to pay the charge, whereas a household with 2 individuals earning £49999 each would not.

The High-income child benefit tax charge is a “tax charge” that you will need to pay if:

  • Either you or your partner have an individual income of over £50000
  • You or your partner claim child benefit. It does not matter if the child living with you is not your child

You will pay back 1% of CB received for every £100 you earn over £50000, once your income hits £60000, CB will have been clawed back in its entirety.

If your (or your partners) individual income is over £50000, the person over the threshold will be liable to pay the charge, regardless of who receives the child benefit payments.

You will need to register for Self-Assessment to be assessed for and pay the charge, with the return and payment due 31st January after the tax year ends (5th April), HMRC does check, but it is your individual responsibility to inform HMRC and pay back any overclaimed child benefit.

What is my Individual income?

Your individual income is not just your salary or self-employed profit though, it’s your Adjusted Net Income. Your adjusted net income is your total taxable income, which includes money you earn through employment, self employment, some state benefits, most pensions, rental income, and trust & savings income.

Its not all bad though, the following are not included in your individual income:

  • Some state benefits
  • Dividends under your dividend allowance
  • Income from tax exempt savings accounts (for example ISAs)
  • The first £1000 income from self employment (trading allowance) or the first £1000 income from property
  • Lottery and premium bond wins (we can all wish!)