Impact on the High–Income Child Benefit Charge
With many employees and the self-employed being furloughed, made redundant or making lower profits, their income for 2020/21 may well fall below the £50,000 limit at which Child Benefit starts being taxed.
The charge is 1% for every £100 that adjusted net income exceeds £50,000, multiplied by the Child Benefit claimed in respect of the children. Note that the rate of Child Benefit increased from 6 April 2020 to £21.05 a week for the eldest child and £13.95 for each additional child.
Many households where the highest earner had income over £60,000, when the benefit is fully repayable, stopped claiming Child Benefit rather than have to repay it back in tax. They should therefore reinstate their claims if the income of the highest paid taxpayer drops below £60,000.
For further information on High-Income Child Benefit, please contact Helen Spalding on 023 8046 1234.