Child benefit: How much can a couple earn before income tax is due?

Child benefit is a unique benefit that has encouragement from the government. The state encourages people to claim child benefit even if they do not need the money itself. This is because claiming child benefit will have secondary perks such as boosting state pension.

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While anyone can receive child benefit payments, some people may find that they need to pay tax on the income.

This is because there is a “high income child benefit tax charge” on high earners.

This tax will be paid as income tax and it will require manual calculations from the applicable parent.

If the person concerned owes the tax, they will need to fill in a Self Assessment tax return so HM Revenue & Customs (HMRC) can calculate the amount of extra Income Tax they’ll have to pay.

Anyone earning £50,000 or more will need to pay back one percent of the family’s Child Benefit for every extra £100 they earn over £50,000 each year.

If the amount earned is £60,000 or more per year then all of the income will need to be repaid as income tax.

At first glance this can seem very costly but some high-earning couples may not be affected at all.

If both parents or guardians earn less than £50,000 a year than they will receive the full amount of child benefit with no need for repayment.

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This means that among couples, up to £99,998 can be earned before any income tax will be due.

For parents who are affected by this however the government detail that it’s perfectly acceptable to claim child benefit but not receive the actual payments.

As the Money Advice Service detail, this will avoid the hassle of paying additional tax.

It will also result in lengthy tax returns not being needed.

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Child benefit can be claimed up until the child themselves turns 16.

Child benefit will stop on 31 August on or after the child’s sixteenth birthday if they leave approved education or training.

The child benefit office will need to be contacted immediately if there are any changes in circumstances that can affect a claim.

These changes can include if the child:

  • Starts paid work for 24 hours a week or more
  • Will live away from you for either eight weeks in a row or more than 56 days in a 16-week period
  • Will go abroad permanently or for more than 12 weeks
  • Moves to or from Northern Ireland
  • Will be in hospital or residential care for more than 12 weeks

The child benefit office can also be contacted for help on any child benefit matter.

This can include help with claims, disagreeing with decisions and even complaint handling.

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