There are some key dates you need to get right
HMRC has provided an update on a tax charge that affects certain DWP claimants. A member of the public approached the group to get some help with working out their bill.
The customer had noted a discrepancy between two figures. They asked: “When using the Child Benefit tax calculator, it seems to provide a lower payment than my manual calculation. Which do I use? Is the calculator rounding down significantly? More than just the pence.” This relates to the fact that if you receive Child Benefit, you must repay an amount if your income rises above a particular threshold.
Who must pay the charge?
The policy is called the High Income Child Benefit Charge. The charge applies when an individual income within your household exceeds £60,000 annually, for either you or your partner.
You must repay 1 per cent of your Child Benefit entitlement for every £200 you earn beyond this level. This means once either you or your partner’s income hits £80,000, you must repay the entire amount.
The Government website features a Child Benefit calculator tool to help you in determining how much you will need to repay. In response to the puzzled customer, HMRC initially enquired why the person was attempting to obtain the figure.
General rule to remember
They clarified they needed to pay the charge. HMRC offered some general guidance in response: “If you’ve received the benefit for a whole year without changes, the calculator should give the correct value.”
In response to this, the claimant explained that they had begun claiming the benefit partway through the year, as their child is currently six months old. Upon hearing this, HMRC advised the parent: “Then your calculation may be more accurate if there was any backdating when you applied for the benefit.”
The customer noted that the calculator requests the total amount of Child Benefit received and that they had entered the precise figure. They asked directly whether the tool could “be relied on as accurate”.
‘You need the exact dates’
HMRC responded: “You should be able to rely on it. You do need the exact dates for it to work.” The tax authority further advised: “The calculator will give you the right figure, just make sure you’re using the same start date as we used to calculate your claim.”
The individual noted that in their particular situation, the calculator had apparently rounded down what they believed to be the exact figure by 0.68p. HMRC replied: “We don’t tax fractions of a pound, so that’s the right answer.”
How much can the High Income Child Benefit Charge be?
Child Benefit is currently worth £27.05 a week for your eldest or only child, or £1,406.60 a year, and then £17.90 for each other child, which works out at £930.80 a year. This means if you had two children and an individual income of £80,000 or more and had to pay back the whole amount, you would have to pay back £2,337.40 a year.
