(Picture: Chantal Baker)
Question:
My basic salary is below £50,000 but with a bonus I earn over £50,000. I have children and receive child benefit. My partner earns £25,000. What shall I do?
Answer:
As your salary is below the £50,000 threshold, you should continue to receive your child benefit. However, it is your responsibility to declare this child benefit to HM Revenue & Customs and, when your income is over £50,000, you will need to repay some of it. The amount you will need to repay depends on the amount you have received and your total income over the £50,000 amount.
The tax charge equates to 1% of the child benefit paid for every £100 of income between £50,000 and £60,000. If you earn more than £60,000, you will need to pay back the entire child benefit you have received.
For example: You have income of £56,000 and have two children. You have received child benefit of £1,788.80. You will need to repay back £1,073.00 to HMRC. If you have received child benefit in prior years and been over the threshold, HMRC are able to claim this back from you. It has been known for HMRC to go back a few years on their claim.
If your income is over £50,000 at all times, you should still register your child for child benefit but you then have the option to refuse it. By registering your child for child benefit, your child will automatically receive their National insurance number once they are aged 16.
If you have a financial question you would like me to answer, please get in touch via the Contact us page of our website.
Chantal Baker is the founder and director of Champ Consultants, accountants and tax consultants based in Caterham.
