Finance

Child benefit: You’ll need to pay tax on the payments in this one sole exception

Child benefit can be claimed by anyone responsible for raising a child so long as they live in the UK. Only one person can claim for a child though and for an eldest or only child, a claimant will receive a weekly rate of £21.05.

This will need to be done through a self-assessment tax return so HMRC can calculate the amount of extra income tax they’ll need to levy.

Claimants will usually be required to pay back one percent of their family’s child benefit for every £100 they earn over £50,000 each year.

So, as an example, a family could be claiming child benefit for a single child while getting £51,000 per year in income.

The income is £1,000 over the limit (10 x £100) so the extra tax is 10 percent of the £20.70 paid out.

In this case, the extra tax paid back will be £107.64 a year (£2.07 x 52).

If earnings were to be more than £60,000 a year, the claimant would need to pay back the entirety of their child benefit as income tax.

For those this tax charge affects may be put off from claiming at all but it should be noted that child benefit and its perks can be claimed while forgoing the actual payments.

People can complete the child benefit claim form while choosing not to receive the actual payments, ensuring that they’ll still receive National Insurance credits.

A claimant can stop receiving child benefit at any point and there are a number of ways to do this.

To stop child benefit, a person can either:

  • Fill in an online form or
  • Contact the child benefit office by phone or post

This cannot be done if the claimant is using child benefit to pay back an overpayment.

Also, once the child benefit stops the claimant must pay back any tax due for each tax year up to the date it ends.



Tags

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
Close
Close