Child benefits change letters going out

Around one million letters will be issued during November to families affected by next year’s changes to Child Benefit, HMRC has announced.

The letters explain the new High Income Child Benefit Charge that takes effect from 7 January 2013.

The new charge will apply when a taxpayer’s or their partner’s income is more than £50,000 in a tax year and if they or their partner receives Child Benefit.

For those with income of more than £60,000, the tax charge is 100 per cent of the amount of Child Benefit. If income is between £50,000 and £60,000, the charge is gradually increased to 100 per cent of the Child Benefit.

Those affected will need to decide whether to keep receiving Child Benefit and pay the tax charge through Self Assessment, or to stop receiving Child Benefit and not pay the new charge. If their income is less than £60,000, the tax charge will always be less than the amount of Child Benefit, and they could lose money to which they are entitled if they stop receiving Child Benefit.

Chancellor George Osborne commissioned a poll to show there was public support for the move. It shows 82% of those surveyed supported the changes, with 78% of people with children under 18 and 74% of households earning over £69,000 being in favour. The Work and Pensions Secretary has also mooted changes to child benefit which would mean larger families would only receive child benefit for two of their children. The proposal has been criticised by child poverty campaigners.

For further information on child benefit changes, click here.


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