{"id":26352,"date":"2024-04-11T15:14:09","date_gmt":"2024-04-11T14:14:09","guid":{"rendered":"https:\/\/smh.group\/?p=26352"},"modified":"2024-04-11T15:19:56","modified_gmt":"2024-04-11T14:19:56","slug":"changes-to-child-benefit-tax-rule","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/changes-to-child-benefit-tax-rule\/","title":{"rendered":"Changes to child benefit tax rule"},"content":{"rendered":"

The Spring Budget unexpectedly introduced a change in the way child benefit is taxed for those with higher incomes.<\/strong><\/p>\n

The high income child benefit charge<\/a> (HICBC or \u2018hicbic\u2019) was introduced in January 2013 to reduce child benefit payments for higher earners. It was considered an arbitrary piece of legislation by some as the charge was triggered where one individual had income exceeding \u00a350,000. A couple with income of \u00a349,999 each were unaffected, but a single parent with income of \u00a360,000 lost all their child benefit.<\/p>\n

The \u00a350,000 threshold, like so many trigger points in the tax regime, was not inflation-linked. What started out as a threshold originally \u00a38,550 above the higher rate threshold had fallen to \u00a3270 below it by April 2021. As child benefit increased, so did the effective rate of clawback. For example, in 2023\/24 someone with income of \u00a356,000 and two children suffered a HICBC of 20.75% in addition to 40% income tax (42% in Scotland) on each extra \u00a31 of income earned. The more children, the higher the HICBC rate.<\/p>\n

This year\u2019s March Budget made two significant changes for 2024\/25:<\/p>\n