HMRC ‘exact dates’ warning over tax bill for DWP claimants | Personal Finance | Finance
The customer raised concerns about a mismatch between two figures. They said: “When using the Child Benefit tax calculator, it seems to provide a lower payment than my manual calculation.
“Which do I use? Is the calculator rounding down significantly? More than just the pence.” This refers to the fact that if you claim Child Benefit, you have to pay back an amount if your income moves above a certain threshold.
Who has to pay the charge?
The policy is known as the High Income Child Benefit Charge. The charge kicks in when an individual income within your household moves above £60,000 a year, for either you or your partner.
You have to pay back 1 per cent of your Child Benefit entitlement for each £200 you earn above this level. This means once either you or your partner’s income reaches £80,000, you have to pay back the whole lot.
The Government website has a Child Benefit calculator to help you work out how much you will need to pay back. Responding to the confused customer, HMRC initially asked why the person was trying to get the figure.
General rule to note
They explained they needed to pay the charge. HMRC shared some general guidance in reply: “If you’ve received the benefit for a whole year without changes, the calculator should give the correct value.”
To this, the claimant responded that in their case they had started claiming the amount mid year, as their child is currently six months old. In light of this information, HMRC informed the parent: “Then your calculation may be more accurate if there was any backdating when you applied for the benefit.”
The customer said the calculator asks how much Child Benefit has been received and they had put in the exact figure. They asked specifically if the tool can “be relied on as accurate”.
HMRC told them: “You should be able to rely on it. You do need the exact dates for it to work.” The tax group also told them: “The calculator will give you the right figure, just make sure you’re using the same start date as we used to calculate your claim.”
The person said that in their case, the calcualtor had rounded down what they thought was the exact figure by 0.68p. To this HMRC replied: “We don’t tax fractions of a pound, so that’s the right answer.”
How much can the High Income Child Benefit Charge be?
Child Benefit currently pays £27.05 a week for your eldest or only child, worth £1,406.60 a year, and then £17.90 for each other child you have, the same as £930.80 a year. So if you had two children and an individual income of £80,000 or more and had to pay back the whole amount, you would have to pay back £2,337.40 a year.
