Child Benefit claw-backs

One of the more impactful changes in the recent budget was the easing of the High Income Child Benefit Charge. Up to 5 April 2024, this has been recovering Child Benefits received by parents if the total income of one or more parent exceeded £50,000.

Basically, parents with income between £50,000 to £60,000 have had to repay all or part of their Child Benefits to HMRC as part of their self-assessment return.

Unfortunately, the following change will not apply to the present 2023-24 tax year or earlier years.

But from 6 April 2024, the lower limit is extended to £60,000 and the upper limit to £80,000. Accordingly, if the highest earner has income in excess of £60,000, for every £200 their income exceeds £60,000 they will have to repay 1% of the Child Benefits received, and when their income exceeds £80,000, effectively all Child Benefits received will have to be repaid.

The mechanism that HMRC use to facilitate this recovery is called the High Income Child Benefit Charge (HICBC).

But what to do if you have been required to register for self-assessment for 2023-24 or previous years and the highest parental income for 2024-25 will be higher than the old £50,000 limit but lower than the £60,000 or £80,000 new limits?

Consider the following options:

  • If you have previously cancelled your Child Benefits, as the HICBC charge would have recovered any benefits received. Consider re-registering for Child Benefits if the income of the highest earning parent is under £80,000.
  • If you registered for self-assessment for 2023-24 or earlier years affected by the HICBC, and the income of the highest earning parent is now under the £60,000 lower limit, and as long as you are not required to submit a self-assessment return for any other reason, then you could apply to HMRC to withdrawn from self-assessment and the obligation to submit a formal tax return each year.

Share:

Accounting in Sheffield and Doncaster Certificates

Recently Added News

Related News

More protection if buying online

The Digital Markets, Competition and Consumers Act has become law after receiving Royal Assent. The Act paves the way to give consumers rights across the

Tax when selling your home

According to HMRC, you would normally have to pay Capital Gains Tax (CGT) on any gain you make if you dispose of: a dwelling house

Quick Links

Web + SEO - LoudCrowd