High Income Child Benefit Charge (HICBC) Updates: What You Need to Know
Starting from 6 April 2024, significant changes to the High Income Child Benefit Charge (HICBC) have been introduced. These updates could reduce your tax burden and bring welcome financial relief to many families. Here’s a breakdown of the key changes:
1. Increased Income Threshold
- New threshold: The income level at which HICBC starts will rise from £50,000 to £60,000.
- What this means for you: If you or your partner earn below £60,000, you will no longer be subject to the HICBC, potentially reducing your tax bill and allowing you to keep more of your Child Benefit.
2. Phased Charge Adjustment
- Income between £60,000 and £70,000: The charge will now be gradually phased in for those within this income range.
- How it works: Similar to the previous system, the charge will be 1% of the Child Benefit received for every £100 of income over £60,000.
- Threshold cap: Once your income hits £70,000, the charge will equal 100% of the Child Benefit received, effectively cancelling out the benefit.
3. Impact on Families
These changes have been designed to ease financial pressure on families that previously fell just over the £50,000 threshold. The higher threshold may enable families who had previously stopped claiming Child Benefit due to HICBC concerns to now reconsider.
- What this means for families: You could retain a greater portion of your Child Benefit without facing the full charge.
4. What to Consider
Even with these changes, families within the £60,000 to £70,000 income bracket will still need to manage their tax responsibilities carefully.
- Self-assessment reminder: If your income falls within this range, a self-assessment tax return is still required.
- Important details: The Child Benefit claimed during the tax year needs to be reported on the tax return of the highest earner in the household.
How We Can Help
At Robson Laidler, we understand that navigating tax changes can be complex, especially when it impacts your family finances. Our tax team is here to help you make the most of these changes, ensuring you are fully compliant while optimising your tax position. Whether you need assistance with self-assessment or advice on maximising your benefits, we’re here to provide clarity and support every step of the way. Contact us via email: taxteam@robson-laidler.co.uk