Child Benefit Change Affect on Contractors
New rules come into place in January 2013 that will affect Child Benefit claimants,including contractors, with a net income level above £50,000, as HMRC seeks to recover the benefit they presently receive.
The tax change will affect households where the combined income is above this figure, with the highest earner becoming liable for the charge.
Although there will be no tax liability if the claim is voluntarily stopped, those (or their partners) with net income above the 50k threshold who choose to continue to receive Child Benefit will be taxed, and required to complete a self-assessment return.
The tax charge is scaled, with those earning above £60,000 being liable for the full benefit received.
At present, Child Benefit is worth £20.30 a week for the first child and £13.40 a week for each other child.
By making additional pension provision or donating to charity using gift aid, taxpayers can reduce their relevant income.
HMRC have published tax details of the changes online, and these will come into force on Jan 7, 2013.