HMRC is set to issue payment demands to couples where one partner earns £60,000 or more, requiring them to repay a portion of their Child Benefit. The tax authority oversees Child Benefit payments, but strict rules apply when either you or your partner earns over £60,000 before tax.
Who Must Repay Child Benefit?
If both partners earn less than £60,000 annually, you receive the full Child Benefit without repayment. However, if either partner exceeds £60,000, you must repay some of the benefit. The charge applies to the higher earner if both partners are over the threshold.
How the Repayment Works
You repay 1% of your Child Benefit for every £200 you earn above the £60,000 threshold. For example, if your adjusted net income is £67,600, you are £7,600 over the threshold. Dividing £7,600 by 200 gives 38, meaning you repay 38% of your Child Benefit.
HMRC warns that you may need to complete a tax return if the amount cannot be deducted from your wages. A partner is defined as someone you are married to, in a civil partnership with, or living with as if married, unless permanently separated.
Why You Should Still Apply
Money Helper advises that even if you face the charge, applying for Child Benefit can be beneficial. It ensures you receive National Insurance credits, protecting your State Pension entitlement from the Department for Work and Pensions. It also means your child is automatically issued a National Insurance number before turning 16 and you do not miss out on other benefits like Guardian's Allowance.
Some people choose not to apply for Child Benefit due to the charge, but experts recommend applying if you or your partner are not working or earn below the lower earnings limit for National Insurance contributions.
