Why should I pay tax on the child benefit? This is a common question that is asked by taxpayers.

You only pay tax if one of these conditions are met:

  1. The taxpayer must be entitled to Child benefit.
  2. Or if the taxable income received by either partner is over £50,000.

Child benefit

Types of partners that can be affected by this same tax charge.

  •  Heterosexual married couple
  • Unmarried couple that resides in the same house.
  • Same-sex Couple (Civil partners)
  • Same-sex couples that are not in a civil partnership but they reside in the same house.

How the tax is calculated for the income that exceeds £50,000?

If the taxable income received by either one of the partners exceed  £50,000, they would be required to pay tax and declare this under self-assessment.

The taxable income received by each individual is assessed rather than their joint income.

Example of Child benefit charge

 “James” and “Jayden” are both married and entitled to child benefit.

James has a taxable income of £50,000 and Jayden has a taxable income of £49,000.

They will not be obliged to declare the child benefit on self-assessment return.

Child benefit

However, if James was receiving £51,000 and Jayden receives £48,000, James would be required to declare the child benefit received and pay tax under the self-assessment system.

The partner that receives the highest income would be the one that has to do the declaration. 

How the tax is calculated on income that exceeds £60,000?

Whenever the income received by either of the partners is over £60,000, the taxpayer would have to pay a tax equal to the amount received in the first place.

The taxpayers that receive income between £50,000 and £60,000.

Tax paid by such individual would be based on 1% on the money received.

There is a 1% increase for every £100 that exceeds £50,000.

If you would like to calculate the amount due for the HMRC, you can click on the link below.

https://www.gov.uk/child-benefit-tax-calculator/main

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