Child Benefit

Introduction

This is a general overview only and you are advised to refer to the legislation at Chapter 8 of ITEPA 2003 and other relevant material.

If the client’s (or their partner’s) income is over £50,000 and either the client or their partner were entitled to receive Child Benefit, then the client may be liable to pay an Income Tax charge based on that Child Benefit entitlement. The charge may also apply if a child lived with the client or their partner during the year and the client did not claim Child Benefit for the child but someone else did and that other person makes contributions to the child’s upkeep.

For these purposes, partner is defined as a husband or wife, civil partner or person lived with as if they were a husband or wife or civil partner and, in the cases of a husband, wife and civil partner, they are neither separated under a court order nor separated in circumstances in which it is likely to become permanent. Two such partners are a couple.

The charge is based on the ‘adjusted net income’ within an income range. This is generally the income after certain deductions have been made and is as determined by Section 58 ITA 2007. Where the adjusted net income is over £60,000, the charge is calculated as the full amount of the Child Benefit entitlement. For adjusted net income between £50,000 and £60,000 the charge is based on 1% of the amount of Child Benefit entitled to for every £100 of income over £50,000.

The charge will not apply to any entitlement for which an election to not receive Child Benefit has been made.

If the client’s adjusted net income is over £50,000 and the client has no partner, then the client is liable to the charge. If the client has a partner, and either one, or both, of them has adjusted net income over £50,000 then the partner with the higher income is liable to the charge.

Where relationship changes occur, the client may:

• become liable for the charge where a new relationship starts if the client is the person with the higher income

• cease to be liable for the charge where a relationship ends.

Entering the data

Option	Description
Total amount for <Tax year / period>	Enter the total amount of Child Benefit which the client and/or their partner(s) (if any) were entitled to during the <tax year / period>. If a child lived with the client for whom someone else claimed Child Benefit, enter the amount of Child Benefit that would have been claimed for the child. Do not enter the amount of any contribution the client received for the child’s upkeep.
Number of children at end of tax year	Enter the number of children, as at the end of the tax year, in the client’s household for which s/he or their partner were entitled to Child Benefit. This will be used where the taxpayer is in Self-Assessment (SA) and has income subject to PAYE and the SA return results in an automatic PAYE code adjustment. The number of children is used to determine how much High Income Child Benefit Charge to adjust the PAYE code by, based on the number of children x the rate of child benefit.
Date payments stopped	If the payments stopped during the tax year, enter the date of cessation.
Taxpayer liable to the High Income Child Benefit Charge in <Tax year>	Untick this box if you enter details in the boxes above but you believe the client is not liable for the charge. This may be because the client’s partner has a higher income and so will be the person liable. Unticking the box means the entries in the above boxes are retained but will not appear in the SA100 and so will not be included in the tax calculation.
Do not collect Child Benefit Charge or tax on income other than employed earnings or pensions for <next Tax year> via PAYE	This box is a copy of that in the Tax Adjustments data entry page. Ticking or unticking it in either form will do the same thing in the other form. Please refer to the help under Tax Adjustments for further guidance.