HMRC has issued an update on the High Income Child Benefit Charge, a tax that affects certain DWP claimants. The clarification came after a member of the public sought help calculating their bill, noting a discrepancy between the official calculator and their manual calculation.
Understanding the High Income Child Benefit Charge
The High Income Child Benefit Charge applies when an individual or their partner's income exceeds £60,000 annually. For every £200 earned above this threshold, 1% of the Child Benefit entitlement must be repaid. Once income reaches £80,000, the entire amount must be repaid.
Child Benefit currently stands at £27.05 per week for the eldest or only child (£1,406.60 per year) and £17.90 per week for each additional child (£930.80 per year). For a household with two children and an income of £80,000 or more, the total repayment would be £2,337.40 per year.
Calculator Accuracy and Key Dates
In response to a query, HMRC explained that the Child Benefit tax calculator should provide the correct value if the benefit has been received for a whole year without changes. However, the claimant had started claiming partway through the year, as their child was six months old. HMRC advised that manual calculations might be more accurate if backdating occurred during the application.
The customer entered the exact amount of Child Benefit received into the calculator but found it rounded down by 0.68 pence. HMRC stated: "We don't tax fractions of a pound, so that's the right answer." They emphasized that the calculator can be relied upon, provided the correct start dates are used: "You do need the exact dates for it to work."
General Guidance from HMRC
HMRC confirmed that the calculator will give the right figure if users ensure they are using the same start date as used to calculate their claim. The tax authority added: "If you've received the benefit for a whole year without changes, the calculator should give the correct value."
