Parents: Child Benefit
Posted by siteadmin on Tuesday 22nd of March 2016.
The High Income Child Benefit Charge – the child benefit tax – came into being a little over three years ago. If you or your partner has income of £60,000 or more in the current tax year, there will be a tax charge equal to your total child benefit unless you have taken a decision to stop benefit payment.
Between £50,000 and £60,000 of income, the tax charge is 1% of benefit for each £100 of income above £50,000. The result can be high marginal rates of tax in the £50,000-£60,000 income band. If you have three children eligible for child benefit, the marginal rate is 65%.
Year End Planning: As the child benefit tax charge is based on taxable income, you could reduce the impact of the tax by making a pension contribution.