Child Benefit Charge on Higher Incomes
Collette Kerr of Gillespie Macandrew discusses a new tax charge you should be aware of
I
f either you or your partner receives Child Benefit and either of you earn more than £50,000 per annum, then a new charge to be introduced on 7 January 2013 will affect you.
For taxpayers with an ’adjusted net income’ in excess of £50,000 the tax charge will be 1% of the full Child Benefit award for each £100 of income between £50,000 and £60,000. Where income is over £60,000 the charge will be the full Child Benefit received.
‘Adjusted net income’ is calculated in a series of steps, taking into account an individual’s income subject to income tax less specified deductions, pension contributions etc.
“Partner” is widely defined and includes: • A married couple living together • Civil partners living together
• A man and a woman who are not married to each other but who are living together
• A man living with a man or a woman living with a woman who are living together as if they were civil partners
If both partners have a net income over £50,000, the charge will apply to the partner with the highest income.
The amount of Child Benefit actually paid will NOT be affected by the new charge. In effect, if Child Benefit is received, and a taxpayer falls within the charge parameters, it will be reclaimed by HMRC either through the PAYE notice of coding or via self assessment.
A taxpayer, or his or her partner, can elect not to receive Child Benefit rather than pay the charge and an election can subsequently be withdrawn if no longer applicable. For existing Child Benefit claimants, elections must be made before 7 January 2013 to avoid the charge entirely.
The first year of the charge will be the tax year 2012/13 and starting this autumn HMRC will be writing to all taxpayers who they think may be affected by the charge. However, their database is not 100% accurate and it is a taxpayer’s responsibility to inform HMRC if they think they will be affected by the charge. If a taxpayer does not, penalties will, no doubt, be charged.
Access to Success
Hit the high notes with Bursary and Scholarship opportunities at the Edinburgh Academy.
Bursaries enable children who would otherwise be unable to attend the Academy to do so
Scholarships reward excellence
Academic, Art, Music and Sport Scholarships are available.
The closing dates for applications are: Scholarships: 10th January 2013 Bursaries: 31st January 2013
Further details are available from: e:
admissions@edinburghacademy.org.uk or from the school website:
www.edinburghacademy.org.uk The Edinburgh Academy is a registered charity, no SC 016999 p - a b l 2 3 0 p g a n
Collette Kerr CTA ATT, Tax Adviser,
Gillespie Macandrew LLP
Contact:
collette.kerr@
gillespiemacandrew.co.uk or 0131 225 1677
5 Atholl Crescent, Edinburgh EH3 8EJ Broxden House, Lamberkine Drive, Broxden, Perth PH1 3RA 142
WWW.SCOTTISHFIELD.CO.UK
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