The above was introduced in 2013, as a “means test”. You may have to pay the High-Income Child Benefit Charge if you or your partner have an individual income that’s over £50,000 and either:
- you or your partner get Child Benefit
- someone else gets Child Benefit for a child living with you and they contribute at least an equal amount towards the child’s upkeep
It does not matter if the child living with you is not your own child.
Defining “income” is the first stumbling block – but is basically total taxable income including income from savings and dividends. If your adjusted net income is over £50,000 and so is your partner’s, then whoever has the higher income is responsible for paying the tax charge.
‘Partner’ means someone you’re not permanently separated from who you’re married to, in a civil partnership with or living with as if you were.
It is unfair in that a couple could both have £50,000 adjusted net income, so £100,000 before tax, and they would not suffer this charge – whereas a couple where one party does not work and the other party earns £100,000 does suffer the charge.
The charge is related to the child benefit received, and there is a clawback of the child benefit on a sliding scale where adjusted net income is between £50,000 and £60,000 – at this upper level the full child benefit amount received is payable to HMRC.
If you are concerned that you (or someone you know) may be affected by this, please get in touch with us as soon as you can and we will review the position and advise further.