If you’re a parent in the UK, you might be familiar with Child Benefit. It’s a helpful allowance provided to those responsible for raising a child. However, something called the High Income Child Benefit Charge (HICBC) goes hand in hand with it.
Financial aid but taxed? It does sound odd, but there is a reason why.
Let’s first explain this concept of High Income Child Benefit Charge.
What is the HICBC?
The HICBC is a tax charge designed to reclaim Child Benefit when the Adjusted Net Income (ANI) of you or your partner is over £50,000. This actually ensures that those who really need financial help, get it while those who are more or less financially stable, don’t get as much.
How does it work?
Once a household’s highest earner goes above the £50,000 threshold, you must register for Self Assessment. Then you fill in a Self Assessment tax return each tax year and pay what you owe. I explain this further in this week’s video. Click to watch.
Why is the High Income Child Benefit Charge a concern?
To be very honest, it’s the unexpected penalties that have caught thousands off guard. So, I highly recommend you understand how the Child Benefit allowance works and what its implications are.
If you are receiving Child Benefit, keep an eye out on your and your partner’s earnings.
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