There are some key dates you need to get right
HMRC has clarified its rules(Image: Getty)
HMRC has spoken out to dispel some customer confusion about a tax charge that certain DWP claimants are required to pay. The tax collecting body spoke out after a customer reached out for help with calculating their bill.
The customer expressed concerns over a discrepancy between two figures. They said: “When using the Child Benefit tax calculator, it seems to provide a lower payment than my manual calculation. Which do I use? Is the calculator rounding down significantly? More than just the pence.”
This relates to the fact that Child Benefit claimants must repay a portion if their income exceeds a certain threshold.
Who is liable for the Child Benefit tax charge?
The policy is referred to as the High Income Child Benefit Charge. The charge is triggered when an individual income within your household exceeds £60,000 per year, for either you or your partner.
You are required to repay 1 per cent of your Child Benefit entitlement for every £200 earned above this threshold. This means that once either you or your partner’s income hits £80,000, the entire amount must be paid back.
The Government website provides a Child Benefit calculator tool you can use to work out how much you’ll need to reimburse. In response to the customer, HMRC initially asked to why the individual was attempting to obtain the figure.
‘Correct value’
The person said they needed to settle the charge. Given this response, HMRC offered some general guidance, saying: “If you’ve received the benefit for a whole year without changes, the calculator should give the correct value.”
The claimant explained that they’d only begun receiving the payments part way through the year, as their child is currently six months old. Taking this into account, HMRC advised the parent: “Then your calculation may be more accurate if there was any backdating when you applied for the benefit.”
The customer clarified that the calculator requests the total Child Benefit received and they had dutifully entered the precise amount. They queried whether the tool could “be relied on as accurate”.
HMRC assured them: “You should be able to rely on it. You do need the exact dates for it to work.” The tax authority also explained: “The calculator will give you the right figure, just make sure you’re using the same start date as we used to calculate your claim.”
The individual said that in their situation, the calculator had reduced what they believed was the correct sum by 0.68p. HMRC clarified: “We don’t tax fractions of a pound, so that’s the right answer.”
How much can the High Income Child Benefit Charge be?
Child Benefit is currently worth £27.05 a week for your eldest or only child, or £1,406.60 a year, and then £17.90 for each other child, which works out at £930.80 a year. This means if you had two children and an individual income of £80,000 or more and had to pay back the whole amount, you would have to pay back £2,337.40 a year.
