The Child Benefit Tax Charge – a further twist in the tale!
Much has been written about the new tax charge on Child Benefit where a member of the household has income in excess of £50,000 pa.
In order to avoid the tax return hassle some people may be best advised to stop receiving the benefit payments.
Payments can be stopped online using the online HMRC form.
This is different from not claiming child benefit. Claims must still be made to avoid the State pension trap. Why?
- Non-working parents caring for a child under 12 qualify for State pension credits through their Child Benefit claim.
- Stopping the claim also stops the credits – potentially leaving the non working parent short on State pension. This shortfall could be made up by making voluntary NI payments, but at a cost of over £50 every month.
- However, continuing the claim, but asking for it not to be physically paid, can give the best of both worlds – continued build-up of State pension without the extra tax return paperwork.
- It is just as important that new parents with high income make a claim but again ask for payments not to be made.
For more information, see HMRC’s helpful guidance on ‘How claiming your Child Benefit can protect your State Pension’
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