Spring Budget and the Child Benefit System
Spring has Sprung: There are changes to come!
Following on from the Spring Budget 2024 earlier this month, it was revealed that there will be changes to the Child Benefit system and the High Income Child Benefit Charge. Here we explain all you need to know!
The Change
From this April 2024, the earnings threshold for the High Income Child Benefit Charge will rise. This means you won’t have to pay any of the benefit back until you start earning at least £60,000 per year – this is currently set to £50,000. You will also be able to earn up to £80,000 before having to pay it all back – a rise from £60,000.
How the High Income Child Benefit Charge is calculated
The High Income Child Benefit Charge (HICBC) kicks in when someone’s income goes over the threshold. Currently, if one person in a household earns more than £50,000 a year, the HICBC is triggered. And then if the earnings climb to £60,000 or more, you might find the entire child benefit could be subject to the charge.
From April, these thresholds are changing. You will be able to earn up to £60,000 before the charge kicks in and then up to £80,000 before you’ll have to pay it all back.
How much will I have to pay back?
The High Income Child Benefit Charge is calculated as follows… For every £100 of income over the threshold, they hit you with a 1% charge on your child benefit. It is their way of making sure the charge fits your income level. Once you hit the maximum, which will be £80,000 come April, 100% of your entitlement will be charged so you won’t actually receive any benefit.
How do I pay it?
For those who are subject to the HICBC, you’ll need to complete a Self-Assessment Tax Return to declare your income and from this you can work out how much you owe.
Can I opt out?
If dealing with all these complications and potential charges isn’t your thing, there is an option to opt out of receiving Child Benefit. Families can choose to skip the benefit altogether and keep things simple.
How can we help?
So, whether you’re crunching numbers for the HICBC or deciding whether or not to opt-out, knowing the ins and outs of Child Benefit – and any applicable charges – is key for keeping your finances in order.
If you need help with your Self-Assessment Tax Return, or you’re not sure whether this charge applies to you? Get in touch today. Our team of experts at A&M Accounting will be happy to help!
