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Top Tip – Child Benefit Tax Charge – CII R03, J01 or AF1

Top Tip – Child Benefit Tax Charge – CII R03, J01 or AF1

Written by Jane Alford

With 2013 now upon us, I thought that this week we’d look at the Child Benefit Tax Charge.

It only has a partial impact this year as it only applies from the 7th January but it does mean that even more people could be dragged into self-assessment. So to see how it works from the next tax year, here’s an example:

Jo has net income of £54,000 and receives child benefit currently of £2,449 per annum for her 3 children. Assuming all the figures stay the same, from 2013/14 the charge on her will be:

£2,449 x 1% = £24.49

£54,000 – £50,000 = £4,000/100 = 40

£24.49 x 40 = £979.60

For this tax year, the amount of income taken into account is the full amount for the year but the amount of child benefit is just that paid from 7th January to 5th April.

So what can people do?

Make pension contributions to reduce income is the obvious one. Anyone got any other ideas?

And remember for more help with your R03, J01 or AF1 exams, here are the links:

For J01 :
For AF1 :
For R03 :