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From January 7 2013 Child Benefit will be reduced for parents or guardians where one of them has net adjusted income of £50,000* or more. The full benefit will continue to be paid and the reduction achieved by increasing the tax of the parent/guardian with the highest income.
1% of the total Child Benefit receivable per £100 of annual income above £50,000.
No tax charge will be made for annual income above £60,000 (child benefit should have been fully reduced at this point).
The person liable to pay the tax in the case of a single parent family is the parent.
Where two people are living together as a couple, whether or not they are married or civil partners, the tax charge is payable by the person with the greatest net adjusted income.
Where person "A" or their partner is claiming Child Benefit, but is not liable to the tax charge, and the child lives with someone else, "B", and B or their partner has income exceeding £50,000, the tax charge is made on either B or their partner depending on who has the greatest income.
Persons liable to the charge who are subject to PAYE will have their tax code adjusted so that the Child Benefit tax is collected from their salary or wages.
Self-employed individuals, partners in a business and others who pay all their tax through self-assessment will pay the charge as part of their instalment payments due on January 31 and July 31 each year.
Contact us today to arrange a free initial meeting with John Galley to discuss your requirements.
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We are a proactive firm of accountants who can assist you in all your financial needs in a friendly, efficient and professional manner.
Building partnerships, listening to your needs, and implementing a solid financial strategy is the backbone of our practice.
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