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Changes to Child Benefit rules

2013-03-07

If your own or your partner’s income is more than £50,000 a year and you are currently in receipt of Child Benefit then you will be affected by the changes.

If your own or your partner’s income is between £50,000 and £60,000 a year then you can keep receiving Child Benefit but you or your partner (whoever has the higher income) will have to pay a tax charge.  This is a percentage of the Benefit you received from 7 January 2013, depending on your income.

If your own or your partner’s income is above £60,000 a year then you may as well stop receiving the Child Benefit as the tax charge will be equal to the benefit you will receive.

In order to fulfil the new requirements you will have to register for Self-Assessment and complete a Self-Assessment tax return every year.  There may be penalties for late registration.

One complication is that if you decided to opt out of receiving the benefit but did not do so by 7 January 2013 you will still be liable to a tax charge for the period from 7 January to the date you opted out. Therefore if you don't opt out by 28 March 2013 then you are likely to need to complete a tax return for 2013/14 as well as 2012/13.

Have a look at this helpsheet http://www.hmrc.gov.uk/childbenefitcharge/hicbc-helpsheet.pdf

For further advice please get in touch!

Vanessa

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