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The high income child benefit charge may have dissuaded taxpayers from claiming child benefit, but this could have long term and unexpected adverse consequences, explains Tolley Insight.
Parents who have not claimed child benefit may be missing out on valuable contributions to their National Insurance contributions record and have to forego part of their future state pension. The concerns were set out in Treasury Committee correspondence with HM Treasury and HMRC published on 26 July (tinyurl.com/PARL-7482).
The high income child benefit charge (HICBC) was introduced on 7 January 2013 to restrict the availability of child benefit for higher earners and their partners. The charge is triggered if a person’s adjusted net income (broadly taxable income before deduction of the personal allowance less adjustments for gift aid and pension contributions) exceeds £50 000.
For every £100 of adjusted net income above £50 000 the charge claws back 1% of the child benefit. If the adjusted net income exceeds £60 000 all of it is withdrawn.
If the charge applies the higher earner will...
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