The changes in Child Benefit which have caused much debate over recent months, will come into effect next month.
As from 7th January 2013, anyone with an annual income exceeding £50,000 or anyone who is the partner of someone with an income of over £50,000 will be affected by the changes.
For incomes above £60,000 per annum it will not be worth receiving child benefit as the tax charge on it will be the same as any benefit received. However a taxpayer can continue to receive it but will need to declare it on their self assessment tax return and pay the tax due on it.
For incomes between £50,000 and £60,000 the additional tax due will be on a sliding scale.
If you opt to stop receiving child benefit, an online form should be completed by the person who receives the benefit. However, a claim should always be made for child benefit on the birth of a child as this preserves the right of the claimant to state pension and some other benefits. It also ensures that the child receives their National Insurance Number at age 16.
Parents who have the ability to structure their own income levels (such as company directors and shareholders) should take tax planning advice if their income is around the £50,000 level. Equalisation of income in family companies, salary sacrifice schemes, and a review of pensions and investments may all be appropriate to consider.
