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Child Benefit has been controversial for some time because it is paid on every child, with no means testing requirements. Now, in these more frugal times, the Government has taken the decision to radically overhaul the benefit and who receives it.
Currently, Child Benefit is paid at a rate of £20.30 a week for the eldest child and £13.40 a week for subsequent children.
The changes are as follows:
- Child Benefit will be withdrawn on a gradual basis from households where at least one person has an income of over £50,000 per year.
- For those with an income of between £50,000 and £60,000, there will be a phased withdrawal.
- If one person in a household has an income of £60,000 or more the benefit will be fully withdrawn.
How the changes will be enforced:
- Child Benefit will be withdrawn by way of a tax charge of 1% of the benefit per £100 of income over £50,000 on the parent with the higher income.
- To prevent this charge being levied, it will be possible to elect not to receive the Child Benefit.
- The charge will be levied in the first year (2012/13) between January 2013 and March 2013 which will make a substantial impact on income for those months.
Rawlinsons’ experts can review your income to calculate the financial effect the changes will have. Where appropriate they may be able to review your current profit extraction structure.
Rawlinsons is a firm of Chartered Accountants, Business and Tax Advisers providing a complete range of accounting, business, taxation and specialist services to more than 3,000 clients.
The Peterborough-based firm has seven partners, a 60-strong team and 70 years of history.
Julie.bloodworth@rawlinsons.co.uk
01733 568321