From 7th January 2013, child benefit will be subject to a tax charge, where one member of the family earns over £50k.
The charge will increase by 1% of the amount of benefit for every £100 earned over £50k so that by the time you reach £60k, the charge will be equal to the benefit received.
As this cannot be calculated until after the end of the tax year, the charge will be payable in the following tax year, either via the PAYE code or via self-assessment.
Don’t get caught out as there may be instances where the recipient of the child benefit is different to the person who will be paying the charge, so make sure you are aware of any consequences of this difference.
This blog was written by Lorraine Dale from Rightway Accounting Services. Do contact Lorraine for more information or if you need clarity on any of the points.
It’s Universal Credit that many self employed should really worry about. Especially those in the early years of their business. Will make things very trying.