Here at www.CheaperAccountant.co.uk we often complete self assessment tax returns for high earners and a number of these individuals fall within the grasps of the Child Benefit Tax Charge. This charge is effectively a method of reducing the child benefit received by higher earners.
For the purposes of this charge a high earner is seen to be anyone earning over £50,000. This is the income level at which the charge takes effect.
You will face the charge if the following applies to you:
1. You or your partner earn more than £50,000.
2. You or your partner receive child benefit income.
For the purpose of calculating the charge, the child living with you does not need to be your child.
Who pays the tax charge?
The highest earner within the relationship pays the charge, providing that person’s income exceeds £50,000.
This individual will be required to complete an annual self assessment tax return to pay this charge. The tax charge is calculated as 1% of the Child Benefit received for every £100 that the individual’s income is above £50,000