Consider the Impact of the Coronavirus Pandemic on the High Income Child Benefit Charge

You may have to pay a tax charge, known as the ‘High Income Child Benefit Charge’, if you have income over £50,000 and either:

• you or your partner claim Child Benefit
• someone else receives Child Benefit for a child living with you and they contribute at least an equal amount towards the child’s upkeep

Taxpayers in this position may have previously cancelled or asked their partner to stop claiming Child Benefit to avoid this tax charge. During the current Coronavirus pandemic many employees are being furloughed, made redundant or asked to take pay cuts and the self-employed are making lower profits. As a result they may find that their income for 2020/21 will fall below the £50,000 limit at which child benefit starts being taxed.

If you are in this position, you or your partner should consider reinstating your claim for Child Benefit if the income of the higher paid partner could drop back below £60,000.  

https://www.gov.uk/child-benefit-tax-charge/restart-child-benefit

Note that the rate of Child benefit increased from 6 April to £21.05 a week for the eldest child and £13.95 for each additional child.  Claims can only be backdated for a maximum of three months.

The High Income Child Benefit charge is 1% for every £100 that adjusted net income exceeds £50,000 multiplied by the child benefit claimed in respect of the children and is fully clawed back once the higher paid partner’s income reaches £60,000.

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