ListenToTaxman.com

UK PAYE Tax Calculator / Salary Calculator

The number 1 free UK salary calculator tax calculator since 1998. Calculate salary, national insurance, HMRC tax and net pay

How much will you lose from your Child Benefit because of the new High Income Charge?

Those working in the Child Benefit section of HMRC must be feeling the pressure at the moment as nearly 1 million letters are sent out to families affected by the new changes to Child Benefit.

The new High Income Child Benefit Charge will apply to families where either partner earns over £50,000. If either partner earns over £60,000 then a tax of 100% of the Child Benefit will be applied, basically negating the benefit. If earnings are from £50,000 to £60,000 then the tax will be applied on a graduating scale, with the tax getting closer to the 100% mark, the nearer the earnings are to the £60,000 mark. You can work out how much Child Benefit you will loose by using our new Child Benefit Loss Calculator.

In some cases deciding to stop child benefit payments altogether may be an option. The new tax will be collected through Self Assessment. In order to pay the High Income Child Benefit Charge one must be registered for Self Assessment. If you are earning over £60,000 and not obliged to register for Self Assessment you may decide to stop Child Benefit payments to avoid making a Self Assessment tax return.

If you are earning between £50,000 and £60,000 per year, and not obliged to make a Self Assessment return, then stopping your Child Benefit payment will cost you money, but save you making a Self Assessment return.

Stopping payments may appeal to some of those coming close to, and over the £60,000 mark.

If you do decide to stop Child Benefit payments you should be aware of a few points. Firstly, stopping payments does not affect your entitlement to Child Benefit. Secondly, you should register for Child Benefit for every child you have, regardless of whether you receive payments or not.

Stay at home parents registered for Child Benefit (whether receiving benefit or not) still get their National Insurance Credits. If you are a new parent and decide not to receive Child Benefit as your spouse is over the £60,000 limit, you still need to register, but tick the box on the form to say you do not want to receive payments. Otherwise you will have to buy back the National Insurance paying years you missed, while caring for your children, in order to qualify for your State Pension.

Entitlement to Child Benefit:

  1. can help you qualify for National Insurance credits that can protect your entitlement to State Pension
  2. can help protect your entitlement to other benefits such as Guardian's Allowance
  3. ensures your child is automatically issued with a National Insurance number before their 16th birthday

Tips on how to reduce the amount of Child Benefit you may lose.

You can find out more information on the changes to Child Benefit and how to stop payments on HMRC's page.

This article was published in our News section on 31/10/2012.

Some Guides you may be interested in

  • Top Ten Claimable Expenses for Limited Companies Let’s start with a thought experiment. I’ll set the scene. You’re a limited company owner, and you, as the director, are the sole employee. You also - understandably – love learning about tax. You open up the Monday morning paper to find some exciting news - HMRC has hinted there are going to be some big changes in the upcoming UK budget.....
  • Salary vs Dividends A guide to tax efficient remuneration for Limited Company directors for 2019/20.
  • What changes to buy-to-let mortgage interest tax relief for landlords? Undoubtedly the biggest source of tax confusion for prospective landlord clients that we speak to here at TaxKings relates to the changes to tax relief for residential landlords, introduced by the UK Government in April 2017.
  • Top Ten Year-End Tax Planning Tips for Small Businesses Tax planning for small businesses is not always straightforward, in fact it can be a serious minefield for the unwary. The chances are however that you and your business could almost certainly pay less in tax, with help from your tax advisor. Here are some tips to get you started.
  • Making Tax Digital for Small Businesses Making Tax Digital for VAT (MTDfV) comes into effect from 1st April 2019. With Chancellor Philip Hammond announcing in his 2019 Spring Budget that MTD for other taxes will not be mandated until at least 2021, all of our focus is now on the VAT implementation.
  • End of Tax Year planning - Use your Allowances to reduce your tax bill. Last minute Tax Planning. Our guide to what annual allowances you have and how to use them to reduce your tax bill.
  • A Contractor's introduction to Director's Loans There may be a time when you need to loan money to or borrow money from your own Limited Company. Director’s loans are wrapped up in fiddly bits of legislation. When borrowing cash from your company, care must be taken. You must ensure that you fully understand the tax implications before you take any kind of loan from your business.
  • What do you do if you receive a letter from the HMRC Let Property Campaign? So you've received a letter from HMRC’s Let Property Campaign? Happy New Year! From my experience, your initial reaction is likely to be one of the following......
  • A contractors guide to VAT Value Added Tax (VAT) is a standard consumption tax levied on almost all goods and services in the UK. If you’re a contractor, working through your own Limited Company, registering for VAT could significantly improve your tax efficiency.
  • Off-payroll working in the private sector - a contractors guide IR35 is a tax legislation used to distinguish between employees and genuinely self-employed contractors. Last month we compiled a comprehensive guide to IR35. Now, we take an in-depth look at how the ‘off-payroll working’ rules, introduced to the public sector in 2017, will be extended to medium and large-sized businesses in the private sector from April 2020.

More from our News section