Tax charge on child benefit – Budget update

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The Finance Bill 2012 will include measures that imposes a new charge on a taxpayer who has adjusted net income over £50,000 in a tax year, where either they, or their partner, is in receipt of Child Benefit for the year with effect from 2013/14 if both partners have adjusted net income over £50,000, the partner with the higher income is liable for the charge.

The income tax charge will apply at a rate of one per cent of the full Child Benefit award for each £100 of income between £50,000 and £60,000. The charge on taxpayers with income above £60,000 will be equal to the amount of Child Benefit paid and as such, there will be no gain.

Child Benefit claimants will be able to decide not to receive Child Benefit if they or their partner do not wish to pay the new charge.

For the tax year 2012-13, the first year of the charge, the amount of income taken into account will be the full amount of income for 2012-13 and the amount of Child Benefit will be that paid in the period from 7 January 2013 to the end of the tax year. For subsequent years, the full amount of Child Benefit and the income for the year will be taken into account.

For more information, go to http://www.hmrc.gov.uk/budget2012/cb-income-tax.htm

Tags: 2012 budget, Child Benefit

This entry was posted on Wednesday, March 21st, 2012 at 17:30 and is filed under Budget. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.