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HICBC: Helping clients to get the credit

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As the High Income Child Benefit Charge (HICBC) threshold remains frozen a new batch of taxpayers are drawn into this charge. Elizabeth Whitely has advice to help clients keep their benefit and NI credits.

16th Apr 2021
Tax writer and practice owner
Columnist
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The £50,000 threshold for child benefit clawback through the High Income Child Benefit Charge (HICBC) remains frozen and so gradually more people are feeling the chill, not least landlords of residential properties whose finance costs no longer reduce taxable income.

The £50,000 threshold has not been uplifted since it was first set in 2012 by George Osborne. The Bank of England’s inflation calculator shows average inflation of 2.4% a year since then, which would suggest an equivalent threshold now would be £60,380. There have been calls for the threshold to be raised but, at a time when the nation’s finances are in a more fragile state even than when ‘austerity’ measures were introduced by Chancellor Osborne following the financial crash of 2008, those calls are not likely result in action any time soon.

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Replies (4)

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Liz Whiteley
By Elizabeth Whiteley
16th Apr 2021 17:41

A client friendly version ‘Child Benefit – the clawback and the credits’ is available free with code FREEHICBC at www.cleartaxinfo.online .

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By More unearned luck
16th Apr 2021 18:31

If ‘withdrawing Child Benefit from families with a higher rate taxpayer so that people on lower incomes are not subsiding those who are better-off’ is the policy aim then the HICBC blatantly fails to do that. CB is not withdrawn from higher rate taxpayers - they are as free as people on lower incomes to claim. What it does do is impose an income tax charge.

Before its introduction in what sense were people on lower incomes subsiding those on higher incomes? I don't recall people on lower incomes being given a tax rebate or some other payment in 2012/13 and later years now that they no longer doing this subsidising.

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Replying to More unearned luck:
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By petestar1969
19th Apr 2021 10:34

Its not an income tax charge, its a clawback of benefits, much like the regularly mis-labelled "bedroom tax".

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Replying to petestar1969:
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By More unearned luck
20th Apr 2021 12:10

1) S 681B ITEPA 2003 "A person ('P') is liable to a charge to income tax for a year if..."

2) if it's not income tax then why are people being fined for failing to comply with their s 7 TMA 1970 obligations? S 7 only mentions IT and CGT, there is no mention of benefit clawbacks.

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