If you or your partner are claiming child benefit, watch out for possible clawbacks of some, or indeed, all of the amounts you are receiving, in the form of additional income tax.
If you both earn less than £50,000 then there is no problem. However, as soon as income exceeds £50,000 there is a tapered clawback so that when income reaches £60,000 all of the child benefit has to be repaid. This is done through the self-assessment system. HMRC now has the power to investigate those they believe may have been claiming and not paid the clawback, and around 200,000 people are thought to be affected.
HMRC know who has claimed child benefit and also knows your income levels (from a salary in any event).
It is possible to elect not to receive the child benefit, but the claim form should still be completed to ensure national insurance benefits – notably state pension – continue to accrue.
A pension payment can reduce the taxable income and thereby reduce the possible clawbacks too.
If you think you are affected or would like a review, please contact us.
