Martin Lewis has hit out over an “unfair” benefits charge that could hit thousands of people in January.
People who claim Child Benefit face being hit with a tax charge at the start of the year if their income goes above a certain threshold.
The extra fee is known as the High Income Child Benefit Charge and will apply if you or your partner have an individual income that is more than £50,000 per year.
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You are eligible to claim Child Benefit if you are responsible for bringing up a child under the age of 16, or under the age of 20 if they stay in approved education or training.
There’s no limit on how many children you can claim for, but only one person in a couple can claim the benefit for a child.
The benefit is paid by HM Revenue and Customs (HMRC) every four weeks at a rate of £24 for the eldest or only child, and £15.90 for any additional children.
But if it’s the case that you or your partner’s ‘adjusted net income’ exceeds £50,000 per year then you will be subject to the ‘high income’ charge.
Your adjusted net income is your total taxable income before any personal allowances, and includes interest from savings and dividends. The government has an online Child Benefit tax calculator which you can use to get an estimate of your adjusted net income.
If it is the case that your adjusted net income is more than £50,000, and so is your partner’s, then whoever has the higher income is responsible for paying the tax charge.
In a post on X (formerly Twitter), Martin Lewis slammed the charge as unfair after being quizzed about the fee from a claimant of the benefit.
He wrote: “I was just asked “I’ve recently received a high income benefit child benefit charge. I earn £53k my wife £12.5k. Yet I’ve read if we both earned £49k, we wouldn’t have received the charge . How is that fair?” That’s correct. Sadly the answer is simple. It isn’t fair.”
Martin went on to explain that anyone who is claiming Child Benefit and earns more than £50,000 in a year must apply for Self Assessment to pay the tax you owe.
The deadline for submitting an online tax return to HMRC is by midnight on January 31, 2024. If you don’t submit this on time you may be issued a penalty fee of £100 if it’s up to three months late, and this will increase if it’s later. You’ll also be charged interest on any late payments.
HMRC issued a warning about the charge earlier this month, reminding people of the looming January deadline. The government body said: “If you or your partner have an income above £50,000 and are claiming Child Benefit – you will need to pay the High Income Child Benefit Charge by 31 January.”
If your income is above the high income threshold then you can choose to either get Child Benefit payments and then pay any tax charge that is owed at the end of each tax year, or opt out of getting the benefit entirely to avoid the tax charge.
If you do choose to stop claiming the benefit then you’ll need to fill in a claim form to tell HMRC you no longer want the payments and pay any outstanding tax charge that is owed for each tax year up to the date your benefit payments stop.
But if you do continue to claim it you’ll get the other advantages of Child Benefit – even if you have to pay the extra tax charge – including National Insurance credits, which count towards your State Pension, and a National Insurance number for your child.
To pay the tax charge, you’ll need to register for Self Assessment and complete a Self Assessment tax return each tax year and pay what you owe.
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