Couples who receive child benefit are in danger of having some of that benefit clawed back as a tax charge if the higher earner has annual income of over £50,000. When the higher earner has income exceeding £60,000 all of the family’s child benefit is clawed back.
If your annual income is around £50,000 and you or your partner receive child benefit you must declare the amount of child benefit received on your tax return. If you do not receive an annual tax return to complete, it is essential that we contact HMRC to register for a self assessment tax return.
With planning it may be possible to avoid the child benefit clawback by making Gift Aid donations or personal pension contributions during the tax year. We can help structure this planning where possible.
If you run a business with your partner, planning may also be possible to equalise your income levels so that neither of you has annual income of more than £50,000. This adjustment of income needs to be done in advance so please talk to us as soon as possible.