It has now been announced that couples who receive child benefit are in danger of having a percentage of the benefit retracted as a tax charge if the higher earner in the couple has an annual income of over £50,000. Should the higher earner have an income of over £60,000, this will result in the entire family’s child benefit being clawed back.
How Can You Avoid Losing Child Benefit?
Suppose that your annual income is around £50,000, and either you or your partner receive child benefit. In this instance, you must declare the amount of child benefit received on your tax return. If you do not receive an annual tax return, it is imperative to get in touch with HMRC to register for a self-assessment tax return.
Through planning in advance and making Gift Aid donations or personal pension contributions, for example, it may be possible to avoid this child benefit clawback. Our dedicated team can help you to structure this planning; please do not hesitate to contact us to get started.
For those who run a business with their partner, careful planning can also allow you to equalise your income levels, ensuring that neither of you has an annual income of over £50,000. Again, this adjustment will need to be completed in advance, and our team are always more than happy to help.