Child benefit eligibility with varying incomes, who is the "higher earner" in this situation?

Damago

Thank you in advance to anyone who reads this I understand it’s a very specific scenario and any help would be appreciated. I have tried the HMRC forums but the reCaptcha isn’t allowing me to register 🙄

Myself and my (married, live-in ...if that is relevant) partner have 1 child who is 3 years old. We have never previously claimed child benefit as the higher earner was earning £58k p/a we didn't think it would be worth claiming due to the eligibility threshold prior to 2024 I understand there would have been a tax charge claimed back that would make it pointless.

Our circumstances have now changed and I need to understand if we will be eligible to claim child benefit for this year, and if so which one of us is classed as the 'higher earner' for claiming purposes

Our circumstances have changed as follows:

Parent 1: previously higher earner as mentioned above, job has changed including receiving redundancy.

Jan - March 2024 annual salary £58k per year

April - mid-May 2024 annual salary £60k per ear

mid-may 2024 received redundancy payment of £49k (first £30k tax-free, tax charged on £19k)

June - Sept 2024 new role annual salary £27k per year + small expenses (less than £100 p/m)

Sept 2024 onwards annual salary will be £45k per year + small expenses (less than £100 p/m)

Parent 2:

Annual salary £48k plus varying overtime earnings+ small expenses (less than £100 p/m), will not exceed £60k

No bonus earnings for either parent.

Overall, parent 1's salary-only element for the tax year April 2024 - April 2025 will average £34k - but this doesn't take in to account the redundancy payment, do I need to take this (or just the non taxable part of this) in to account as earnings for the purpose of child benefit eligibility?

If the non taxable element of parent 1's redundancy payment counts towards income then I calculate that to be a total of £53k for the tax year, or if the whole redundancy payment counts towards income it would be £83k

So if Parent 1's earnings count as £53k and parent 2's earnings £48k I understand that we would be eligible? And Parent 1 should be the claimant?

However if the variable elements (overtime + expenses) mean that Parent 2's overall income is unpredictably pushed higher than parent 1's, is there any penalty for parent 1 claiming?

Again, if you have got this far thank you - and if you are able to help advise I would be very grateful

Dazed_and_C0nfused

You have misunderstood a few things.

There are no income rules which prevent you claiming Child Benefit.  One of you may have had to pay a tax charge (HICBC) because of your (adjusted net) income level but if that was £58k then you would have ultimately kept 20% of the Child Benefit.

Neither does income determine which of you can claim and receive Child Benefit.

Income does determine which of you would have to pay any High Income Child Benefit Charge.

You have to look at each tax year separately and the person with the highest adjusted net income in each tax year will have to pay the charge.

For most people adjusted net income is simply adding all taxable income, including interest and dividends (even if taxed at 0%) and then deducting any Gift Aid donations (the gross amount inclusive of basic rate relief).  Some people can also deduct pension contributions but in 99.9% of cases that would only be those made using the relief at source method that can be deducted.

sheramber

The person who claims CB does not need to be the same person em who has the higher income.
 Payment will be made to the person who claims it.
The higher income tax charge is charged on the person with the higher income, regardless of who claims the benefit.