Child Benefit Restriction

Published: Wednesday 21 March 2012

From 7 January 2013 Child Benefit will be withdrawn for families where at least one earner is in receipt of income in excess of £50,000.

Following the previous heavily criticised proposals, the Government has at last announced how Child Benefit will be withdrawn for high earners.  Instead of a reduction in payments to the carer, Child Benefit will be clawed back from the highest earner in a household by an annual income tax charge. 

For each £100 earned over £50,000 1% of the Child Benefit allowance will be charged to the taxpayer, so that individuals with income of at least £60,000 will repay all of their Child Benefit.  This will either be collected through the self-assessment tax return or via the PAYE code for those in employment.

These provisions emphasise even further how family businesses can plan their remuneration structure to ensure that tax liabilities are minimised and access to state benefits are maximised.