The deadline is approaching for families with one parent earning more than £50k to decide whether to opt out of Child Benefit
NASDAL is reminding its dentist clients that the 7 January deadline is nigh.
If you are a parent in the high income bracket and you do not opt out, you will have to pay back some or all of the benefit via a new High Income Tax Benefit Charge (HITBC).
Chancellor George Osborne announced the tax charge on Child Benefit in 2010 with an introductory date of 7 January 2013. From this date, if one parent earns between £50k and £60k, the tax will be less than the Child Benefit but if it’s over £60k, it will be the same as the child benefit.
Ian Simpson, NASDAL member and a partner in specialist dental accountants Humphrey & Co, advises that if your income fluctuates between £50,000 and £60,000 a year, it will be best to carry on receiving the Child Benefit and paying the charge as and when is appropriate through a self-assessment Tax Return.
He also advises:
- the tax charge applies where the individual income is £50,000+, not joint income
- the child does not have to be your child for you to be affected by this charge
- a Child Benefit claim form still needs to be completed when a child is born as this helps the claimant qualify for credits to protect their State Pension.
Ian said: 'This is a confusing change to the previously universal Child Benefit scheme which we anticipate will be costly to administer and mean more people will need to file self-assessment tax returns.'