1 Child Benefit tax charge

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We have 1 child and Hmrc have said we must pay all the money back for last few years. I thought this was not means tested when we signed up? Doesn’t matter who you are everyone is entitled to the benefit.

How can a family both earning 50k so 100k coming in pay nothing and a family earning 60k and partner earning 8k not receive the benefit. Surely this system is flawed?

Can this tax charge, why is it called tax charge? Be avoided?

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  • Dazed_and_confused
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    I thought this was not means tested when we signed up?

    It might not have been when you were first entitled to it. But things change.
    How can a family both earning 50k so 100k coming in pay nothing and a family earning 60k and partner earning 8k not receive the benefit. Surely this system is flawed?

    You would have to ask George Osborne, it was his idea.
    Can this tax charge, why is it called tax charge? Be avoided?

    No idea about why it's a tax charge but the need to pay it is based on something called "adjusted net income" so you could have a "salary" of £100k and not be liable to pay it if your adjusted net income was less than £50,100.

    The two main areas which posts on here would suggest are popular ways to avoid or minimise the charge are Gift Aid payments and pension contributions. Neither usually reduce* your taxable income but they do reduce your adjusted net income and can also entitle you to additional higher rate tax relief so are often seen as very tax efficient.

    *ignore company pension contributions in a net pay scheme as you have already had maximum tax benefit from these i.e. salary £60,000 less pension contribution 10% = taxable salary of £54,000 (the amount shown on your P60).

    Gov.uk has more information about adjusted net income.
  • Pennywise
    Pennywise Posts: 13,468 Forumite
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    You would have to ask George Osborne, it was his idea.

    He announced it, but it was a Libdem policy that they insisted on, just like the removal of the personal allowance at earnings over £100k. Their tax policy was to "tax the rich" and they made sure they did as part of the coalition agreement.
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