With many employees and the self-employed being furloughed, being made redundant or making lower profits, their income for 2020/21 may well fall below the £50,000 limit at which child benefit starts being taxed.
The charge is 1 per cent for every £100 that adjusted net income exceeds £50,000 multiplied by the child benefit claimed in respect of the children. Note that the rate of child benefit increased from 6 April to £21.05 a week for the eldest child and £13.95 for each additional child.
Many couples with income over £60,000 when the benefit is fully taxed, stopped claiming child benefit rather than have to repay it back in tax. They should therefore reinstate their claims if the income of the higher paid taxpayer drops back below £60,000.
To find out more, contact your usual Beavis Morgan Partner.