From 7th January 2013, any taxpayer earning more than £50,000 a year who receives Child Benefit, or whose partner receives Child Benefit, will be liable to incur a new income tax charge.
Anyone who has to pay the charge will need to pay an amount equivalent to some or all of the Child Benefit that they or their partner receive. For those with income between £50,000 and £60,000, the tax charge will be 1% of the Child Benefit for every £100 above the £50,000. Those with income above £60,000 will be charged the full amount of the Child Benefit and might wish to stop receiving Child Benefit payments. If customers choose to keep receiving the Child Benefit payments they will need to declare the amount which they or their partner are entitled to receive by registering for Self Assessment and filling in a tax return each year.
HMRC will write to taxpayers who are likely to have income over £50,000 to explain the changes and tell them what they need to do if they are affected. Those who pay income tax via PAYE can choose to have the underpayment for 2012-13 and their ongoing in-year liability collected through their tax code in 2014-15. However, they must still complete a Self Assessment return. To find out more go to hmrc.gov.uk/childbenefitcharge
