In 2012 the Government announced its decision to withdraw child benefit for the higher-income households. As of 7thJanuary 2013 about 1.2 million families have had their child benefit either reduced or cut.
HOW DOES IN WORK?
If you are a parent with a child under 16 or under 20 in certain cases (staying in approved education or training) you are entitled to child benefit. Child benefit is basically a tax-free payment from the Government to help you cope with the cost of raising your children. You get £20.50/week for your eldest child and £13.55/week for each of your other children (rates fixed until April 2015).
But since the beginning of 2013, if you and/or your partner earn more than £ 50,000 (all taxable income) you will not be entitled to the total amount of child benefit. And if you earn £60,000 you lose the right to claim the benefit.
WHAT HAS CHANGED?
The government has introduced the “high income child benefit tax”. If you are affected by the change you should have filled a self-assessment form which specifies whether you or your partner are earning above the threshold and claiming child benefit. In that case 1% of every £100 earned over £50,000 is repaid. In the case where you and your partner both earn above £50,000 this will only apply to the highest income. If one of you is earning £60,000 (after pension contributions and gift aid) the full amount of child benefit is repaid.
You can work out the child benefit you are entitled to and your tax charge using HMRC Child benefit tax calculator.
You can also choose not to claim child benefit in which case you are exempted from filling in a self-assessment form. However you can still fill in a Child benefit claim form to get National Insurance Credit which counts toward State Pension.
OTHER CHANGES
This year child benefit has not increased with inflation for 2014/15 as the government has frozen the amount as at the 2013-2014 rates. It is planned to rise by 1% over the next two years.
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