£50,000 Limit for Child Benefit

The £50,000 limit for child benefit payments applies if anyone in your household earns in excess of £50,000, in a year, this will affect you.

This means that if any member of your household earns more than £50,000 in a tax year your household will lose some or all of your child benefit payments,

The child benefit will be clawed back at the rate of 1% of the benefit for every £100 that you earn over £50,000. This £50,000 threshold applies to the highest earner in the household, whether they be husband, wife or partner. It will be recovered through the annual Self Assessment Tax Returns which are required to be prepared by anyone who is a higher-rate taxpayer. Although many higher rate taxpayers do not have any other income apart from their salary so in reality many higher rate taxpayers do not complete Self Assessment Tax Returns.

It is estimated by HMRC that an extra 500,000 people will be required to complete an annual tax return because of the changes to child benefit.

It should be noted that the £50,000 limit for child benefit changes includes all forms of income, these include:

• Salary
• Dividends
• Property income
• Interest receivable

So beware, even if your gross salary is under £50,000 a year you may still lose some child benefits because of other forms of income. If your total income exceeds £60,000 then all the child benefits will be lost.

Because the Child benefit will still be paid gross and reclaimed as tax, then it is probable that many people will get unexpected tax bills when they complete their Self Assessment Tax Return.

Failure to submit this tax return will of course lead to the inevitable and potentially very expensive late filing penalties. One solution to this issue would be to join the 165,000 households who have already surrendered their Child Benefit, however, this benefit is your right, and even at a reduced level, it is worth keeping.

PGA Tax Returns has a Personal Tax Return Service that costs just £149 and will ensure that you are compliant with the new rules and do not end up with late filing penalties.

Call us to discuss your requirements on 01666 829013.