🚨 Attention Parents: New Child Benefit Tax Alert! 🚨
By 2030, an additional 54,000 UK families will face the high income child benefit charge, raising the total to 378,000. With rising wages pushing more households above the threshold, the government is set to collect a hefty £2.57bn from this tax over the next six years.
What’s Happening? 🤔
Since 2024, the income threshold has been £60,000, up from £50,000. However, as incomes rise, more families will feel the pinch. Households where the top earner makes £60,000+ might have to repay some—or all—of their child benefit. Families hit hardest are those where a single-earner income hovers just above this threshold.
Here’s How It Works:
📌 Earn more than £60,000? For every £200 over, repay 1% of your child benefit.
📌 Hit £80,000? Sadly, that means 100% repayment.
📌 Two earners both pulling £60,000? No stress, no repayment!
Caught by Surprise? You’re Not Alone!
Many families discover too late that they owe tax. If your income crosses £60,000, it’s crucial to inform HMRC ASAP to avoid unexpected bills.
How to Save 💰
Boost your pension contributions! It lowers your taxable income. For instance, contributing £8,000 can save an earner making £70,000 over £3,500 in tax and potentially eliminate the child benefit charge. 🎉 Every pound into your pension knocks it off your taxable income, which can mean less—or no—charge.
Also, charitable donations through Gift Aid can reduce your income when calculating this tax.
Parents, stay informed and strategise to maximise your savings! 🙌
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Image: Getty / hobo_018