High-earning Child Benefit recipients have until Sunday to decide whether to stop receiving the benefit, HM Revenues & Customs is warning, amid concerns that it has failed to inform around 300,000 families who may be affected by the change.
The High Income Child Benefit Charge (HICBC) starts on 7 January. The new charge will apply when a taxpayer or their partner’s income is more than £50,000 in a tax year, and if they or their partner receive Child Benefit.
Lin Homer, HMRC’s Chief Executive, said: “Over 155,000 people have already decided to stop receiving Child Benefit. There is easy to use information and a calculator on our website which will help families come to a decision.”
For those with income of more than £60,000, the tax charge is 100 per cent of the amount of Child Benefit. For income 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 a couple wish to stop receiving the benefit, the Child Benefit recipient should contact HMRC before the new charge starts on 7 January. HMRC says that if their income is less than £60,000, the tax charge will always be less than the amount of Child Benefit, so they could lose money to which they are entitled if they choose to stop receiving Child Benefit.
Although HMRC has sent out letters to those it believes will be affected, it has been reported that around 300,000 families have not been informed. HMRC blames an incomplete database.
For more information on the changes go to http://www.hmrc.gov.uk/childbenefitcharge