The Child Benefit High Income charge came into effect on the 7 January 2013. It affected those whose income (or partners income) was above £50,000 per year.
If you are concerned about your eligibility, it is important to ensure that you correctly calculate your Adjusted Net Income. To do this;
Firstly, calculate your Gross taxable Income - examples of this include:
For a full list of taxable income please see www.hmrc.gov.uk. There are also payments that are made from your income that are disregarded, thus bringing down the Adjusted Net Income figure that you need to declare to the HMRC. Adjusted Net Income is the total taxable income less certain tax reliefs.
Secondly, take off Gift Aid donations. For every £1 of Gift Aid donations you make, you can take £1.25 from your net income.
Thirdly, take off pension contributions. If you made a contribution to a pension scheme where your pension provider has already given you tax relief at basic rate, take off the 'grossed -up' amount (whatever you paid plus the basic rate of tax). So for every £1 of pension contribution you made take £1.25 from you net income.Back to contents
Macy's total taxable income is £59,000. This is made up from
Macy makes private pension contributions without tax relief of £4750. So her net income is £54,250 (£59,000 less £4750). Macy makes an annual Gift Aid donation to the RCN's Foundation Benevolent Fund of £1000. Because of this she can take £1250 from her net income. Macy's adjusted net income is £53,000 (£54250 less £1250).
As her adjusted net income is above £50,000, this figure is used to work out her High Income Child Benefit Charge.Back to contents
There are a number of options. You could consider:
Page last updated - 25/01/2018