Child Benefit tax: Online tool shows whether you’ll be hit with 100% tax charge

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Martin Lewis explains who is eligible for Child Benefit

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Child Benefit is paid to adults if they are responsible for bringing up a child who is under 16, or under 20 if they stay in approved education or training. Many claimants, though, will have to pay a tax charge in order to claim the benefit, known as the High Income Child Benefit Charge (HICBC). High income benefit charge affects parents or guardians who earn over £50,000 and £60,000. If a person’s individual income is over £50,000 then they have to pay back one percent of their Child Benefit for every extra £100 they earn over £50,000 annually.

Those who earn over £60,000 are required to repay their Child Benefit payments in full to the Government.

The tax bill owed varies from case to case and the Government has provided an online tool to help people work out an estimate of their tax liability.

Found on the Government’s website, the tool can help estimate how much Child Benefit the claimant could receive in a tax year.

It can also estimate the high income benefit tax charge the claimant or their partner may have to pay.

To start with, the calculator asks the claimant how many children they want to claim for.

It will then ask about which tax year the person is claiming for and if they’re claiming for only a part of the tax year for any of the children concerned.

A person will then need to add in details of their salary before tax, as well as any other employment income or income from other sources.

The user will then need to provide information on any allowable deductions they receive, such as pension contributions, retirement annuity contracts, cycle schemes or gift aid donations.

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After all this, the calculator will then display the total amount of child benefit the person should receive.

There are two child benefit rates, one for the eldest child and another for further children a person has.

The rate for child benefit rose by 3.1 percent in April 2022 with the ratefor the oldest or only child going up to £21.80 a week from £21.15.

The rate for further children increased to £14.45, up from £14.

Only one individual can receive Child Benefit in a family, so if a person’s individual income is over £50,000 and so is a partner then whoever has the higher income is responsible for paying the tax charge.

Those who face the charge can either “opt out” and not receive the benefit or remain in and pay the tax charge at the end of each tax year.

However, the Government encourages anyone who can to claim Child Benefit even if they financially do not need to.

This is because by claiming, a person can be entitled to National Insurance Credits which protect entitlement to state pension.

A person’s child will also be automatically issued a National Insurance Number before turning 16.

There is no limit on how many children can be claimed for.

Child Benefit is usually paid every four weeks, on a Monday or Tuesday.

A person can have the money paid weekly if they are a single parent or are getting certain other benefits such as Income Support.

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