Changes to child benefit

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There has been much discussion recently about the changes to child benefit payments but what are the nuts and bolts of the matter?

If your income (or your partner’s income) is more than £50k per annum you will be affected by the changes and you will lose some of the benefit.  It will be withdrawn entirely if one parent earns above £60,000.

What can you do?

The deadline for high earners to declare they will no longer qualify for child benefit has now passed.  You will now have to fill in self-assessment tax forms every year.   If you are not already registered you will need to complete form SA1 before 6th October 2013.  You can get a copy at hmrc.gov.uk/sa1 (cut and paste to your browser)

How does it affect me?

If you earn more than £60k per annum, the tax charge will be equal to the amount you receive as child benefit – you should make provision for this as HMRC will effectively be asking you to repay what you have received.

If you earn £50k – £60k the tax charge will be less than you receive as child benefit but there will still be tax charge.

Child benefit payments stopped for those declaring they no longer qualify on 7th January 2013.

The tax charge will be 1% of the child benefit paid for every £100 of income between £50,000 and £60,000 OR the full amount of the child benefit paid for income over £60,000 per annum.

Child benefit is paid at the rate of £20.30 a week for the first child, and then £13.40 a week for each child after that.

It lasts until each child reaches 16 or 18 if they are still in full-time education and in some cases until they are 20.

If you missed the deadline and wish to make provision for your future tax charge, consult an independent financial adviser for suggestions on how you might achieve this.

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