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

  • Company car tax for business owners What are the tax implications of buying a company car from a tax perspective? Take a look at our indepth analysis.
  • Landlords - Should you incorporate or not? Iain Rankin our Property Tax Expert, from TaxKings, takes a run through the decision making process to help you weigh up what the appropriate course of action is for you
  • What’s Required For Your First Digital VAT Return The government has started to roll-out Making Tax Digital (MTD) in a bid to engineer the UK tax system so that it embraces the online era. I hope this guide will help you understand the implications.
  • Scotland Vs England And Wales: What Are The Differences In Tax? There are significant differences to how much tax you pay in Scotland in comparison to England.
  • AirBnb vs long-term-rentals For the holiday maker & professionals alike, it’s safe to say that short-term let platforms - such as AirBnb, Flipkey, or Homeaway - have been a bit of a game changer.
  • Bookkeeper v Accountant Are you paying your accountant to prepare your books? Could you save some money by hiring a bookkeeper? Clare Doherty explains the key differences…
  • 5 Tax changes that may affect you this year Following the start of a new tax year, it’s always useful to stay abreast of changes to your responsibility. Certain legislative updates in 2019 have been overshadowed by the spectre of Making Tax Digital for VAT, causing smaller (but significant) changes to be overlooked.
  • 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.

More from our News section