Changes to Child Benefit April 2024

Changes to Child Benefit April 2024

Changes to High Income Child Benefit

Following on from the recent announcement in the spring budget this year where the chancellor increased the threshold of child benefit limit from £50,000 to £60,000.

Who will this effect?

Every household from 6^th April 2024 can now earn up to £60,000 before child benefit starts to be reclaimed by HMRC.

Basically, when someone in the household has an income of £60,000 and above and receive the child benefit, they have to declare it on their return regardless if they physically receive it or not.

HMRC will then apply a tax adjustment that withdraws 1% of the benefit for every extra £200 received above the threshold.  The effect is that when income reaches £80,000 the Child Benefit is taxed away completely.

It should be made clear that joint income is irrelevant – a couple where both are earning £59,000 are not affected by the charge.

If you have opted out of the child benefit because your income was above the £50,000 and you was having to pay it back as tax charge now might be a good time to have look and see if you would now get to keep it.

Example:

Tax year 2023-2024

Mary and John have 3 children and receive £24.00 per week for the first child and £15.90 for each of the other children per week, which equals a yearly total of £2,957.40.

Mary earns £49,000 per year and John earns £55,000 per year.

John is £5,000 over the limit so to work out the amount to be repaid it works out as follows:

£5000/£100 = 50% to repay

£2,957.40 received £1,487.00 to be repaid to HMRC.

Tax Year 2024-2025

Mary and John have 3 children so receive £25.60 for the first child per week and £16.95 for each of the other child per week so this gives a yearly total of £3,153.50.

They have both received payrises in 2024-25 so Mary’s income has rise to £52,000 and Johns to £60,000 per year.

Under the new regime John will still need to declare the child benefit on his return but as he has just reached the £60K limit he will not need to repay any of the child benefit so they will retain the whole £3,153.50 they received in the year.

It is really important that if you have a change in you or your childs circumstances you must inform HMRC if you do not hear from them. You can find out more about changes in circumstances here: https://www.gov.uk/report-changes-child-benefit

You can find out more about the updates and changes following the budget in our summary here: https://www.hwca.com/spring-budget-2024-detailed-summary/

If you would like any help or advice with your tax return and relevant benefits then please get in touch with us on 01379 640555 or email us at diss@hwca.com.