If you are an individual who is earning over the amount of £50,000 and you or your partner is getting the child benefit as well, then this guide is a must-read for you. You might be unaware of but you have to pay the (HICBC) High Income Child Benefit Charge. In some cases, people are on a low income but their partner is on a higher income which affects both the partners to pay HICBC.
Moreover, to avoid any extra payments, one should be well aware of planned traps. Most of you must be wondering how to define High Income Child Benefit Charge. Before we delve into further discussion, let’s understand the charge and the ways to avoid the traps.
Further in this article, we will cover the following:
- How to Define HICBC?
- How does my Partner’s Income can Affect Me?
- The Bottom Line
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How to Define HICBC?
HICBC is the abbreviation of High Income Child Benefit Charge. It is a kind of tax charge that is designed to claw back the amount of child benefit if you or your partner is earning over the adjusted net amount of £50,000. The question that arises here is that what is adjusted net income? We don’t take adjusted net income must same as taxable income is. Because there are many further deductions are to be taken from this income in case it has gone over the amount of £50,000.
Moreover, car insurance and medical insurance is also included in the adjusted net income. If we discuss the way HICBC is calculated, it totally depends on the adjusted net income of the partner who is earning high. It doesn’t matter that who is getting the benefits. It has been observed that there occurs problems for such couples who like to keep their financial matters separate from their partner. A couple can be in a married relationship and living together or they can be in a civil partnership until they are separated from each other.
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How Does my Partner’s Income can Affect Me?
If you are working on a low income, whereas your partner works on a higher income. Even then you will yourself as a part of such a household that is applicable for this charge. Some people discourage the fact because this is applicable only because of the higher income of the partner but the consequences are the same for both the partners due to the conditions and terms.
Many people find it suitable to not apply for the child benefit so that they can avoid the consequences. This makes it less popular and more like a financial burden on a household. Moreover, if you decide not to claim for child benefits, this means that you are missing out on National insurance as well which is only advantageous when you are getting child benefits until your child turns 12.
Another loss for your child will come out in the form of not having his national insurance number when he reaches the age of 16. Another whole process will be carried out to solve this problem of national insurance numbers as well.
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The Bottom Line:
Now that you know High Income Child Benefit Charge, we can sum up the discussion by saying that HICBC turns out to be quite beneficial in terms of seeking a balance for the individuals who earn really good and they are being advantageous to have child benefits as well. Although, you clearly observe that the consequences of your household are affected.
Due to the charge, your income is reduced. This is why many people also see it as advantageous and they don’t find child benefits suitable according to their income suitability. We hope this article helped to develop a better understanding.
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Disclaimer: This article is written to provide general information based on the High Income Child Benefit Charge.
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