{"id":26743,"date":"2024-06-10T11:37:15","date_gmt":"2024-06-10T10:37:15","guid":{"rendered":"https:\/\/smh.group\/?p=26743"},"modified":"2024-06-10T11:37:15","modified_gmt":"2024-06-10T10:37:15","slug":"child-benefit-charge-reforms-passed","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/child-benefit-charge-reforms-passed\/","title":{"rendered":"Child Benefit Charge Reforms Passed"},"content":{"rendered":"<p>Taxpayers will benefit from changes to the high income child benefit charge, as all tax measures from the March 2024 Budget were enacted before parliament was prorogued for the General Election.<\/p>\n<p><strong>Changes to benefit charge<\/strong><\/p>\n<p>For 2024\/25, the high income child benefit charge (HICBC) does not apply until income exceeds \u00a360,000, a \u00a310,000 increase from the previous threshold of \u00a350,000. This means:<\/p>\n<ul>\n<li>A parent earning \u00a360,000, who would previously have lost all of their child benefit claim, now keeps the entire amount.<\/li>\n<li>The rate of withdrawal is halved, so child benefit is not fully withdrawn until an individual\u2019s income reaches \u00a380,000 (previously \u00a360,000). The charge now removes 2% of child benefit for every \u00a3100 of income over \u00a360,000.<\/li>\n<li>Once income reaches \u00a380,000, the charge is 100%. Therefore, the child benefit claim is effectively reduced to nil.<\/li>\n<\/ul>\n<p>Despite the changes, the HICBC can still mean a high effective marginal rate of tax.<\/p>\n<p><strong>Calculating income<\/strong><\/p>\n<p>A recently lost appeal to HMRC shows the importance of correctly calculating income for threshold purposes.<\/p>\n<p>The taxpayer\u2019s basic salary did not exceed the former HICBC income threshold of \u00a350,000, but for the seven years under investigation he had overlooked the taxable benefit from having a company car. This was sufficient to take income over \u00a350,000, so the charge was payable.<\/p>\n<p>Taxpayers therefore need to be particularly careful when calculating income:<\/p>\n<ul>\n<li>Savings income is likely to be much higher than previously given increased interest rates. The gross amount is included, ignoring the \u00a3500 savings allowance.<\/li>\n<li>Dividend income, including reinvested dividends, has to be included ignoring the \u00a3500 dividend allowance.<\/li>\n<li>Income from a lodger within the \u00a37,500 exemption is ignored, as is any income within an individual savings account.<\/li>\n<\/ul>\n<p>The gross amount of pension contributions and gift aid donations reduce the income figure, providing a useful tax planning opportunity where income is between \u00a360,000 and \u00a380,000.<\/p>\n<p>Don\u2019t forget to extend child benefit claims for 16- to 19-year-olds who continue in approved education or training. This can be done <a href=\"https:\/\/www.gov.uk\/government\/news\/dont-lose-out-extend-child-benefit-for-your-16-to-19-year-old\">online<\/a> or using the HMRC app.<\/p>\n<p>For more information,\u00a0<a href=\"https:\/\/devstagesite.co.uk\/smhgroup\/contact\/\">contact us<\/a>\u00a0on\u00a0<strong>0114 266 4432<\/strong>\u00a0or email\u00a0<a href=\"mailto:info@smh.group\"><strong style=\"font-style: inherit;\">info@smh.group.<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Taxpayers will benefit from changes to the high income child benefit charge, as all tax measures from the March 2024 Budget were enacted before parliament was prorogued for the General Election. Changes to benefit charge For 2024\/25, the high income child benefit charge (HICBC) does not apply until income exceeds \u00a360,000, a \u00a310,000 increase from the previous threshold of \u00a350,000. This means: A parent earning \u00a360,000, who would previously have lost all of their child benefit claim, now keeps the entire amount. The rate of withdrawal is halved, so child benefit is not fully withdrawn until an individual\u2019s income reaches \u00a380,000 (previously \u00a360,000). The charge now removes 2% of child benefit for every \u00a3100 of income over \u00a360,000. Once income reaches \u00a380,000, the charge is 100%. Therefore, the child benefit claim is effectively reduced to nil. Despite the changes, the HICBC can still mean a high effective marginal rate of tax. Calculating income A recently lost appeal to HMRC shows the importance of correctly calculating income for threshold purposes. The taxpayer\u2019s basic salary did not exceed the former HICBC income threshold of \u00a350,000, but for the seven years under investigation he had overlooked the taxable benefit from having a company [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":26744,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[3],"tags":[1301,324,11],"class_list":["post-26743","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-smh-accounting-business-advisory","tag-2024-budget","tag-high-income-child-benefit-charge","tag-hmrc"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Child Benefit Charge Reforms Passed - SMH Group<\/title>\n<meta name=\"description\" content=\"Taxpayers will benefit from changes to the high income child benefit charge, as all tax measures from the 2024 Budget were enacted.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Child Benefit Charge Reforms Passed - 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