HM Revenue and Customs has issued a caution to individuals earning above £60,000. In a recent announcement, the tax authority highlighted that some individuals might be required to reimburse funds.
According to HMRC, individuals exceeding the £60,000 threshold may be subject to the High Income Child Benefit Charge. This charge applies when either partner in a household earning over the specified amount receives Child Benefit, leading to a repayment of some or all of the benefit.
Additionally, the charge may be applicable if another individual residing with you receives Child Benefit for a child and contributes an equal amount towards the child’s expenses.
During the 2022/23 tax year, around 440,000 people collectively repaid £525 million in High Income Child Benefit Charge. Official data revealed that households with one partner earning more than £50,000 were required to reimburse a portion or the entirety of their child benefit.
To determine if your income surpasses the threshold, HMRC advises calculating your ‘adjusted net income,’ which includes taxable income like savings interest and dividends before accounting for certain deductions such as pension contributions.
Parents can utilize the Child Benefit tax calculator to estimate the amount they might need to repay. Those earning above £60,000 annually will have to reimburse a portion of their Child Benefit, with full repayment required for incomes exceeding £80,000.
Repayments are calculated at a rate of 1% of Child Benefit for every £200 earned over the threshold. For instance, an adjusted net income of £67,600 in the 2024 to 2025 tax year, which is £7,600 above the £60,000 threshold, would result in a 38% repayment of Child Benefit.
For further details from HMRC, click the provided link.