You may think that you don't need to file a self-assessment but be careful you don’t get caught out by The High Income Child Benefit charge.
This charge applies to taxpayers whose income exceeds £50,000 in a tax year and who are in receipt of child benefit. The charge claws back the financial benefit of receiving child benefit either by reducing or removing the benefit entirely.
If you or your partner have exceeded the £50,000 threshold for the first time during the last tax year, you must file a self-assessment. Where both partners have an income that exceeds £50,000, the charge applies to the partner with the highest income.
Taxpayers who continue to receive child benefitand earn over the relevant limits must pay any tax owed for 2021-22 on or before 31 January 2023, but there is no harm in submitting your return early so you understand your liability and can plan to put a little aside each month for the tax liability. The child benefit charge is charged at the rate of 1% of the full child benefit award for each £100 of income between £50,000 and £60,000. For taxpayers with income above £60,000, the amount of the charge will equal the amount of child benefit received.
If the High Income Child Benefit charge applies to you or your partner it's usually still worthwhile to claim Child Benefit for your child, as it can help to protect your State Pension and will make sure your child receives a National Insurance number. However, you can choose to stop receiving the benefit which will remove the charge.
If you want to find out more, one of our accountants will be happy to have a free consultation with you to see how we can help. Just call us on 01296 468185.
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