High Income Child Benefit Charge (HICBC)

You may recall we told you about the new HICBC in November 2012 tax tips. It came into effect on 7th January 2013 and as we prepare the 2012/13 income tax returns, many of you are beginning to see this new rule take effect.

If you and your partner’s joint income for the tax year is £50,000 or more and one of you receives child benefit then the HICBC could affect you: The charge is 1% of child benefit for every £100 above £50,000 and if household income exceeds £60,000 then the HICBC will be 100% of the child benefit for that period.

In 2012/13 the charge is based on the amount of child benefit you were entitled to receive for the period 7th January 13 to 5th April 2013 (i.e. 13 weeks worth). From April 13 the charge will be based on the full year’s entitlement to child benefit.

It is included within the self assessment income tax calculation and will be payable to HMRC along with any income tax due – so the HICBC for 2012/13 is payable by 31st January 2014.

You will be asked about child benefit on your Defacto self assessment income tax checklist – if you or your partner receives child benefit then you must answer yes to this section. We will then contact you regarding additional information needed. As HICBC is paid by the higher earner we may need to ask for details of your partner’s income so that we can establish who should incur the charge.