HMRC High Income Child Benefit charge (a good one for young parents that work)

Issue
HMRC introduced the High Income Child Benefit charge (HICBC) on 7 January 2013. Although the importance of claiming Child Benefit has been made clear in the new Child Benefit claim pack and on the HMRC website, DWP staff need to be aware of this change and claimants should be referred to HMRC for further information in the event of enquiries.

Action
To cascade to customer facing staff.

Timing

Immediate

Background

HMRC changes to High Income Child Benefit charge came into effect from 7 January 2013. Details of this change are set out below but claimants need to know that if they fall into the High Income Child Benefit charge group it is important to still make a claim to Child Benefit, even if they do not want to get the payments. This is because entitlement to Child Benefit:
   ·  can help them qualify for National Insurance credits that can protect entitlement to State Pension
   ·  can help protect  entitlement to other benefits such as Bereavement Benefit and Guardian's Allowance
   ·  ensures their child is automatically issued with a National Insurance number before their 16th birthday

Detail of the Charge (for information only)

A new income tax charge will apply to those taxpayers affected by this measure to reduce or remove the financial benefit of receiving Child Benefit. For taxpayers with income between £50,000 and £60,000, the amount of the charge will be a proportion of the Child Benefit received. For taxpayers with income above £60,000, the amount of the charge will equal the amount of Child Benefit received. The amount of Child Benefit payable will be unaffected by the new tax charge.

The High Income Child Benefit charge will be applied to taxpayers, if during a tax year:
   ·  individual income exceeds £50,000 and they are entitled to receive Child Benefit
   ·  individual income exceeds £50,000 and they live (or have lived) with a partner who is entitled to receive Child Benefit
   ·  or in the event that both partners have an income that exceeds £50,000, and one of them is entitled to receive Child Benefit, the charge will apply only to the partner with the highest income.
They will also be affected if during a tax year they have an individual income of more than £50,000 and both of the following apply:
   ·  someone else is entitled to receive Child Benefit for a child who lives with them
   ·  they are entitled because they contribute at least an equivalent amount of Child Benefit towards the child's upkeep, for example pocket money or clothes

It does not matter if the child that is living with them is not their own child.

If they are affected by the High Income Child Benefit Charge they will need to choose to do one of the following:
   ·  keep receiving Child Benefit payments - but if they do they will need to declare the amount they or their partner are entitled to by filling in a tax return each year and registering for Self Assessment if they have not done so already
   ·  tell the Child Benefit Office that they want to stop receiving Child Benefit payments - in which case they won't be liable for the new tax charge and would not need to fill in a tax return (unless they need to for other reasons)

If they decide to stop their Child Benefit payments it would not affect their entitlement to Child Benefit.

More information
For more information about claiming Child Benefit the claimant should visit gov.uk or contact HMRC.
   ·  www.gov.uk/child-benefit/how-to-claim child benefit
   ·  or telephone the HMRC Helpline on 08453 021 444. Lines are open Monday to Friday 8am to 8pm, Saturday 8am to 4pm. If they have a speech or hearing difficulties and use a textphone, the number to use is 08453 021 474.