Financial Secretary to the Treasury, Victoria Atkins MP, has said that the government wants to simplify the process for customers who become liable to the High Income Child Benefit Charge, particularly for those who currently need to register for Self Assessment to pay the charge.
In a written Parliamentary Statement, she said government will provide details in due course on how it will enable employed customers to pay through their tax code, without the need to register for Self Assessment.
The change will take the onus away from higher earners having to remember to pay back part or all of their child benefit, which should see far fewer people inadvertently fail to pay the charge, and also will help simplify the tax affairs of those affected.
However, the change will still be complex for people to implement and those impacted will need to make sure their tax code is correct, says Shaun Moore, tax and financial planning expert at Quilter. “If it isn’t, then they once again have to take on the burden of getting it fixed.
Moore comment: “This, ultimately, is just tinkering round the edges of what is a perverse charge. Currently, basic rate tax payers are impacted by this charge, an intentional policy that is designed to raise as much as it possibly can without appearing unfair. Furthermore, single income households are at greater risk of paying the charge, penalising hard working single parents.
“The government needs to go much further here. If it had moved in line with inflation, the £50,000 threshold set in 2013 would be over £65,000 today.
“There are ways to lower your tax bill and ensure you don’t get hit by the charge. For example, making additional pension contributions can lower your overall income and mean you don’t hit the £50,000 threshold. Clearly, this won’t be right for everyone, but it is an option should you wish to reduce or avoid the charge.”
