{"id":9186,"date":"2022-05-07T12:41:03","date_gmt":"2022-05-07T11:41:03","guid":{"rendered":"https:\/\/sbwm.uk\/?p=9186"},"modified":"2022-05-10T11:57:07","modified_gmt":"2022-05-10T10:57:07","slug":"can-the-child-benefit-charge-be-fixed","status":"publish","type":"post","link":"https:\/\/sbwm.uk\/v3\/news\/can-the-child-benefit-charge-be-fixed\/","title":{"rendered":"Can the child benefit charge be fixed?"},"content":{"rendered":"<p><b>A critical review of how the government taxes child benefits has raised a major question mark over HMRC\u2019s approach to collecting payments.<span class=\"Apple-converted-space\">\u00a0<\/span><\/b><\/p>\n<p>Child benefit tax, or the High-Income Child Benefit Charge (HICBC) to use its legal name, is a case study in how not to introduce and operate a tax. It was designed as a quick fix to political pressure for the withdrawal of child benefit from high earners during a period of austerity.<span class=\"Apple-converted-space\">\u00a0<\/span><\/p>\n<p>When the HICBC was introduced in January 2013 \u2013 not even the start of a tax year \u2013 broadly speaking, it applied if either parent had \u2018adjusted net income\u2019 of over \u00a350,000. At the time, the higher rate income tax threshold throughout the UK was \u00a342,475, meaning the \u2018high income\u2019 label had some meaning. The threshold has remained at \u00a350,000, with the result that, outside Scotland, it has now been overtaken by the higher rate threshold (\u00a350,270 in 2022\/23). A corollary is that the proportion of families affected has increased over the period from one in eight to one in five, according to the Institute for Fiscal Studies.<span class=\"Apple-converted-space\">\u00a0<\/span><\/p>\n<p>In a recent review, the OTS has been highly critical of HICBC and the convoluted way in which HMRC collects the tax. The OTS notes that in 2019\/20, HMRC opened over 125,000 compliance checks on \u2018customers\u2019 who it suspected had not paid the correct amount of HICBC. The OTS report also noted that HMRC had written to 94,000 potentially affected people in 2020\/21, many of whom could face shock tax bills in the near future.<span class=\"Apple-converted-space\">\u00a0<\/span><\/p>\n<p>The HICBC is structured as a tax charge equal to 1% of child benefit received for each \u00a3100 of income above the \u00a350,000 threshold. So, for example, if you have:<\/p>\n<ul>\n<li>two children and are entitled to child benefit of \u00a336.25 a week (\u00a31,865 a year); and<\/li>\n<li>your \u2018adjusted net income\u2019 is \u00a354,000; then<\/li>\n<li>you face a tax charge of \u00a3754 (\u00a31,865 @ 40%).<span class=\"Apple-converted-space\">\u00a0<\/span><\/li>\n<\/ul>\n<p>At \u00a360,000 or more of income, the tax charge matches the child benefit, making it sensible to opt for non-payment of the benefit. However, you or your partner should still register for child benefit because it gives entitlement to national insurance credits.<span class=\"Apple-converted-space\">\u00a0<\/span><\/p>\n<p>In some circumstances, it is possible to use tax planning to limit or even sidestep the HICBC completely, but given the charges\u2019 complexities, doing so requires professional advice.\u00a0<\/p>\n<p><b><i>The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax or benefit advice.<span class=\"Apple-converted-space\">\u00a0<\/span><\/i><\/b><\/p>\n<!--themify_builder_content-->\n<div id=\"themify_builder_content-9186\" data-postid=\"9186\" class=\"themify_builder_content themify_builder_content-9186 themify_builder tf_clear\">\n    <\/div>\n<!--\/themify_builder_content-->","protected":false},"excerpt":{"rendered":"<p>A critical review of how the government taxes child benefits has raised a major question mark over HMRC\u2019s approach to collecting payments.\u00a0 Child benefit tax, or the High-Income Child Benefit Charge (HICBC) to use its legal name, is a case study in how not to introduce and operate a tax. It was designed as a [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":9196,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"wds_primary_category":160,"footnotes":""},"categories":[160],"tags":[],"class_list":["post-9186","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","has-post-title","has-post-date","has-post-category","has-post-tag","has-post-comment","has-post-author",""],"builder_content":"","_links":{"self":[{"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/posts\/9186","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/comments?post=9186"}],"version-history":[{"count":0,"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/posts\/9186\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/media\/9196"}],"wp:attachment":[{"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/media?parent=9186"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/categories?post=9186"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/tags?post=9186"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}