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Check Out the New Child Benefit Rules!

I don’t know what the hot topic of conversation is on everyone’s lips at the moment out there?

Strong contenders surely must be the love life of Harry Styles (singer in the pop group One Direction, – don’t know who he is? Come on you old ones, get with it!), or probably the brand-new TV Celebrity Programme ‘Splash’ (despite having Tom Daley as a diving coach, this is not getting the good ratings ITV was anticipating), or maybe even the £50million Leeds Utd have available to spend in the January transfer window (ooh, I wish!).

But, no, I don’t think it is any of these. I think the number 1 contender at the moment must be the New Child Benefit Rules.

Now there is a lot of mis-understanding about these new rules, so let’s see who this affects?

Who Is Affected?

  • As a starter, this must not be confused with Tax Credits – these are entirely different.
  • You must have a child under the age of 16, or between the ages of 16-18 in full time education.
  • You must have income above £50,000. By this I mean £50,000 per year, not the £50,000 per week figure the footballers like Michael Owen are probably collecting.
  • The £50,000 income figure does not mean joint income, but means if one of the claimants has annual income above £50,000. Only then do the new rules apply. A claimant is either a spouse, or for unmarried couples, a live-in partner.
  • Where one of these has income higher than £50,000, then the Child Benefit will start to reduce.
  • Very importantly, if one person’s income is between £50,000 – £60,000, then it is still worthwhile claiming the Benefit, as the claw back of the Benefit will certainly be less than the amounts you will receive.
  • But, if the income exceeds £60,000, then all the Child Benefit will become repayable.

Action Required

  • If neither of you have income above £50,000, then no action is required.
  • If one of you has Income between £50,000 – £60,000, then still make the claim, but save some of this to be repaid back. The amount to be saved depends on how much over the £50,000 income figure you are.
  • If one of you has income above £60,000, then if you make a claim, you will have all of this to pay back.

Repayment of Child Benefit

If you have to repay any of the Child Benefit, then if you have not already done so, you must apply for membership of that exclusive Self-Assessment Club, (obviously not as popular as the Cheryl Cole Fan Club I hasten to add), but nonetheless probably growing at faster rate than the Cheryl Cole Fan Club.

By joining the Self-Assessment Club, you will have to complete a Self-Assessment Tax Return Form each year, and so the Child Benefit to be repaid will be notified to a grateful HMRC in this manner. I have no doubt HMRC will be delighted to issue you with a Bill for this overpaid Child Benefit.

Tax Planning

  • For you employed people out there, any payments made into a personal pension by yourself can also reduce your income and so preserve your Child Benefits. – Contact us, we do have access to IFA’s (Independent Financial Advisors), who can assist you here.
  • If you are running a Business then there can be a possibility of avoiding the repayment of this Child Benefit, if you consider Tax Planning for your Business before the end of each Tax Year. – Contact us at JCL (Jones Cooper Limited), we can help!

Rickey

Rickey Cooper FFA, FMAAT, ATT
JCL - Jones Cooper Limited

 

 

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