From January 7th 2013 anyone with children and an income of more than £50,000 a year will be affected by changes to Child Benefit.
The government previously stated that from January 2013 anyone with children paying higher rate tax would lose Child Benefit completely. However, as announced in the March 2012 Budget, the policy will now only apply if you have an income of £50,000 or more. And rather than losing all your Child Benefit in one go there will now be a taper on incomes between £50,000 and £60,000.
The taper works by taking away 1% of your Child Benefit entitlement for each £100 of income you have over £50,000. So the effect of the taper depends on the number of children you have. The table below illustrates the effect in a full year and in 2012/13, when only 13 weeks of Child Benefit will be affected by the new rules.
|Number of children||1||2||3||4||5|
|2012/2013 (13 weeks of Child Benefit)|
|Amount of Child Benefit affected||£264||£438||£612||£787||£961|
|Charge per £1,000 income over £50,000||£26||£44||£61||£79||£96|
|2013/2014 (52 weeks of Child Benefit)|
|Amount of Child Benefit affected||£1,056||£1,752||£2,449||£3,146||£3,843|
|Charge per £1,000 income over £50,000||£106||£175||£245||£315||£384|
This system means that anyone with an income of £60,000 or more will face a charge equal to 100% of their Child Benefit. It is up to you to decide whether to continue to receive Child Benefit or not under these circumstances.
The charge applies whether you or your partner claims Child Benefit. It will be based on self-declaration by taxpayers. To tell people about the change HMRC will be writing to all people who might be affected this Autumn.
More information is available from http://www.hmrc.gov.uk/budget2012/tiin-0620.htm