Tax

High Income Child Benefit Charge

Reminder for High Earners: Check Your 2022/23 Tax Return for the High Income Child Benefit Charge (HICBC)

HMRC has issued an important reminder to taxpayers regarding the High Income Child Benefit Charge (HICBC) for the 2022/23 tax year. If you or someone in your household earns more than £50,000 a year and receives child benefit, this notice is for you. Here’s what you need to know to stay compliant and avoid potential penalties.

High Income Child Benefit
High Income Child Benefit Charge

Understanding the High Income Child Benefit Charge (HICBC)

The High Income Child Benefit Charge is a tax charge that applies to higher-income households where someone receives child benefit. Specifically, if your income—or your partner’s income—exceeds £50,000 for the year, you may need to pay back some or all of the child benefit through the HICBC.

For the 2022/23 tax year:

  • Full child benefit recovery: If your income is £60,000 or more, all of the child benefit received must be paid back.
  • Partial child benefit recovery: If your income is between £50,000 and £60,000, a portion of the child benefit must be repaid.

What Actions Do You Need to Take?

HMRC has asked taxpayers to take immediate action if they might owe the High Income Child Benefit Charge for the 2022/23 tax year or if they have made an error in their tax return regarding the High Income Child Benefit Charge.

Here’s what you should do:

  1. Check If You Owe the HICBC:
    • Visit the government’s online services or use the HMRC app to check if you’ve received child benefit payments.
    • Use the online calculator provided by HMRC to determine if the HICBC applies to you and, if so, how much you owe.
  2. Amend Your Tax Return if Necessary:
    • If you didn’t include the HICBC in your tax return or if you made a mistake in calculating the amount, you need to amend your return.
    • Ensure that you make any necessary amendments by 30 September 2024 to avoid penalties.
  3. Pay Any Outstanding Tax:

Deadline Reminders

  • Amend your return by 30 September 2024: This is the deadline set by HMRC in their reminder letter. Acting by this date can help you avoid penalties.
  • Statutory deadline for amendments: The final deadline to amend your 2022/23 tax return is 31 January 2025.

Made a Mistake in a Previous Year?

If you realise you’ve made an error for the 2021/22 tax year or earlier, don’t worry. HMRC provides guidance on how to amend or submit a return for previous years. It’s crucial to follow these guidelines to correct any mistakes and stay compliant.

Looking Ahead: Changes for the 2024/25 Tax Year

Starting from the 2024/25 tax year, the income thresholds for the High Income Child Benefit Charge are changing:

  • The lower limit will increase to £60,000.
  • The upper limit will rise to £80,000.

What does this mean for you? If you or the highest earner in your household previously didn’t claim child benefit because their income was over £60,000, now is the time to reconsider. If the highest earner’s annual net income is below £80,000 for the 2024/25 tax year, you might be eligible to receive child benefit without having to pay back the full amount through the HICBC.

High Income Child Benefit Charge

Stay Compliant with K2 Accountancy Group

Navigating tax obligations can be complex, but you don’t have to do it alone. K2 Accountancy Group is here to help you understand your responsibilities and ensure you remain compliant with HMRC’s regulations. If you need assistance with your tax return or have questions about the HICBC, please get in touch with our team today. We’re here to support you every step of the way!

Please note that all information in this article should be considered general and not official advice from the K2 Accountancy Group or its partners. For advice on how the information may affect you or your business directly, please contact us.

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