Child benefit is being withdrawn through an income tax charge in households where someone has an income of over £50,000 per year. If this income is between £50,000 and £60,000 the income charge will apply gradually and only where the income exceeds £60,000 will child benefit be withdrawn completely.

The change takes effect from 7 January 2013.

If both partners have adjusted net income over £50,000 then the partner with the higher income is liable for the charge. The charge is at a rate of 1% of the full child benefit award for each £100 of income between £50,000 and £60,000.

Opting out

Child benefit claimants can elect not to receive child benefit if they or their partner do not wish to pay the new charge. This will also save them having to complete a self assessment tax return when they are not otherwise required to do so. Where you have opted out of receiving child benefit you will be able to opt back in for two years from the end of the tax year concerned.

Elections to opt out for 2012/13 for existing claimants will need to be made before 7 January 2013.

New parents who may plan to elect not to receive child benefit should still make the initial claim if the parent wants to obtain the associated National Insurance credits for state pension entitlement purposes, especially important for a non working parent and also means the automatic issue of a national insurance number for the child at age 15.

Paying the charge

This will be assessed through self-assessment, so individuals will need to apply to join self assessment by completing for SA1 or HMRC may develop an online facility.

It will be payable either through payments on account and balancing payments or by having an adjustment to the taxpayers tax code if the total liability does not exceed £3,000 and the return is submitted before the December due date for coding out.

If you have 3 or more children your self assessment liability could easily exceed £3,000 meaning it would be payable as a lump sum for the first full year 2013/14 with half of the 2014/15 payment on account making it a rather large sum payable by 31 January 2015.


This is new and procedures are still being finalised but it does look to be here to stay.