Do you get child benefit? 🔎 Here are paullewismoney's seven golden rules:
You may be thrilled to get that car with your job but car benefit and fuel charges can add thousands of pounds to your taxable income. Even if your actual pay is well below £50,000, a company car can push you over the threshold.The child benefit tax is based on income not just earnings. So taxable income from savings interest, dividends, rent from a property, or a side hustle can take you over the limit even if your pay is below £50,000.
If you live with someone as a couple and they have a bigger income than you that is over £50,099 a year, then they are liable for the child benefit tax If you or your partner have to pay the child benefit tax, then that person must fill in a self-assessment form. If you don’t already fill one in then tell HMRC by the October after you become liable. If you do not fill in the form or pay the tax, there will be penalties and interest to pay as well.
If this brings your income below £60,000, it will reduce the child benefit charge and if it brings it below £50,100 it will wipe out the charge. For example, a parent with two children who had an income of £53,000 could pay £2,321 into a pension scheme and wipe out the £565 child benefit charge she would otherwise pay. She would also get higher rate tax relief leaving her with a net cost of just £1,176 for a boost to her pension of £2,900.
Similar rules apply to any gifts to charity made through Gift Aid so makes sure you put them on your self-assessment form.Go to gov.uk and search “child benefit tax charge” to find a calculator to work out what you should pay and details of the rules including how to opt out of receiving child benefit – and opt back in.1) If you – or your partner if you have one – have an income over £50,099 a year, you must tell HMRC and pay the high income child benefit tax charge.
2) A new partner with an income higher than yours and above £50,099 will have to pay the charge. If you both keep your incomes below £50,100, neither has to pay. If one has an income over £60,000, the charge equals your child benefit.4) A company car boosts your taxable income and can make you liable for the charge or increase the amount you pay.
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