High income child benefit charge and self assessment

The high income child benefit charge is applicable to individuals earning over £50,000 annually who also receive child benefit.

Many working professionals in the UK earning more than £50,000 have been impacted by the high income child benefit charge.

It’s designed to progressively reduce the state payment received by higher income earners effectively acting as a “tax on children” in the eyes of some critics.

To pay the tax charge which has been in place since 2013 a self assessment tax return needs to be completed.

Over the years this requirement has sparked controversy and debate with it dragging thousands of taxpayers into the self assessment tax return process just to pay back the child benefit charge.

A recent government statement has announced that they are set to introduce changes that will ease the self assessment administrative burden on the parents affected.

Simplifying the high income child benefit charge

According to a government statement the plan is to streamline the process. The high income child benefit tax charge will no longer require those affected to register for self assessment to pay what they owe to HMRC.

Instead the owed amount will be retrieved via the individual’s PAYE tax code which will mean the tax charge is deducted through their salary.

In a written statement outlining the new proposal, Financial Secretary to the Treasury Victoria Atkins MP, said: “The Government wants to simplify the process for customers who become liable to the high income Child Benefit charge, particularly for those who currently need to register for Self-Assessment to pay the charge. The Government will provide details in due course on how it will enable employed customers to pay through their tax code, without the need to register for Self-Assessment.”

The high income child benefit tax charge has considerable financial implications for affected families. The charge is calculated as 1% of the child benefit for each £100 of income between £50,000 and £60,000.

For those earning over £60,000, the charge is a full 100%, effectively eradicating any child benefit.

The expected impact of the HICBC changes

It will eradicate the need for parents to navigate the time consuming process of registering for self assessment simply to repay some of their child benefit.

Additionally these changes will address the issue of families receiving self assessment late filing penalties for unintentionally not submitting a self assessment tax return to pay HMRC the high income child benefit tax charge.

High income child benefit tax charge and your tax code

For those parents who are affected the proposal will result in an adjustment to your tax code.

Presumably HMRC will calculate a new tax code to include the value of the child benefit charge and send it to your employer so they can start deducting more income tax from your salary.

The likelihood is that because more income tax has to be taken from your wages your tax code will be reduced and you should receive a notification from HMRC to explain the adjustment so you can check it.

Should the HICBC threshold be adjusted?

The high income child benefit tax charge has been contentious since its implementation in 2013. Critics argue that it has unintentionally ensnared families with simple tax affairs, resulting in unexpected self assessment penalties.

Furthermore, the charge’s progressive nature, combined with frozen income tax thresholds and wage inflation, has pulled more parents into its net.

Statistics reveal the wide reaching impact of the high income child benefit tax charge. Approximately 373,000 individuals were affected by the charge in the 2019-20 fiscal year, raising £416 million for the government.

However, by August 2020, over 620,000 families had opted out of receiving child benefit to evade the charge.

It’s been reported that if the £50,000 threshold had been adjusted in line with inflation it would currently stand at over £65,000.

This suggests that many of those currently affected by the high income child benefit tax charge would not be had the threshold been subject to regular adjustments.

The proposed changes to the high income child benefit tax charge represent a significant stride towards simplifying the tax system for higher income earners.

While the HICB charge remains a questionable issue for higher earners these updates should ease the administrative burden on those affected, reducing the likelihood of inadvertent non payment and the associated self assessment penalties.


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