Child benefit: who is entitled to what

http://www.guardian.co.uk/money/2013/jan/07/child-benefit-who-entitled-what

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From 7 January families will still be able to receive child benefit, but those with at least one partner earning £50,000 or more will be expected to repay some of the money through a tax charge levied when they fill in a self-assessment tax return. The charge is equal to 1% of every £100 earned in excess of £50,000, which means anyone earning £60,000 or more will have to repay all of their benefit.

Benefits received in the 2012/13 tax year will need to be declared and the charge paid in January 2014. Families who do not want to claim the benefit and then have to repay it can contact HMRC to opt out entirely – www.hmrc.gov.uk/stopchbpayments or 0845 302 1444.

Here are some examples of what it means for different families.

Couple, living together, with two children. She claims child benefit and earns £30,000, he earns £54,000: This family will be entitled to child benefit worth £20.30 for their first child and £13.40 a week for their second child – a total of £1,752 a year. However, the new tax charge will mean he faces repaying some of that benefit when he fills in his next self-assessment form. The amount repaid will be equal to 1% of every £100 he earns in excess of £50,000, so 40% of what the family have received. That reduces the annual value of the benefit by £701 to £1,051. It does not matter whose children they are.

Couple, living together, with three children. She claims child benefit and earns £55,000. He earns £61,000: The family can claim child benefit worth £47.10 a week, or £2,449 a year. Although she claims the benefit and earns more than the £50,000 threshold, he earns more so is expected to declare the payments and meet the charge. The tax charge wipes out their entire entitlement. Unless she opts out of receiving child benefit, he will face a tax bill of £2,449.

Separated couple with one child. The child lives with her and she claims child benefit. She earns £30,000, he earns £54,000: The mother is entitled to receive £20.30 a week or £1,056 a year. If she and the father split up some years ago, she is entitled to keep the full amount and he does not receive a tax bill. If they split up during the current tax year he will face a tax charge for the period they were living together as a family. If it was six months, for example, he will face a charge equal to 40% of six months' payments, or £211. It does not matter whether or not it is his child.

Young single mum with one child. She lives with her parents and claims child benefit. Her mother earns £56,500: The child's mother is entitled to receive £20.30 a week or £1,056 a year. She can continue to do that with no one facing a tax charge – HMRC is only interested if there is a partner earning more than £50,000.

Single parent with two children. He claims child benefit and earns £58,600: This family is entitled to child benefit worth £33.70 a week or £1,752 a year. However, because the father earns more than £50,000 he will face a tax charge. This will be equal to 1% of each £100 he earns over the threshold, so 86% of the amount he receives each year. That reduces the annual value of the benefit by £1,507 to £245.

Couple, living together, with three children. She claims child benefit. They each earn £49,000: This family gets child benefit worth £47.10 a week, or £2,449 a year. Because neither partner earns more than £50,000 they will continue to receive the full amount without facing a tax charge. If either partner gets a pay rise of £1,000 or more they will need to notify HMRC.

Couple, living together. She has just moved in with him and his two children. He claims child benefit. She earns £55,200, he earns £38,000: This family is entitled to child benefit worth £33.70 a week or £1,752 a year. As soon as she joins the family she is liable for a tax charge to offset some of the benefit they receive on a pro-rata basis. If she moves in six months into the tax year she faces a charge equal to 52% of six months' payments, or £456. That reduces the annual value of the benefit to £1,296.