In recent years, the High Income Child Benefit (HICB) has gained a lot of popularity in the United Kingdom. It is very common for people to claim HICBC on the basis of their parents’ gross salary. Now with the introduction of the HICBC Tax Credit, even individuals without children can also claim a tax credit on the basis of their income. This has made it easier for many working-class people to claim the HICBC tax credit. However, there are many professional accountants that could help you get the best possible deal on this.
Benefits of HICBC
The HICBC Tax is applicable only where an individual claiming Child Benefit or their spouse has over-adjusted net income above the specified limit. The individuals who have over-adjusted net incomes, usually have two sources of income their salaries and civil partnerships. The civil partners may also receive benefits from the HICBC under certain conditions. In the case of the spouses, both the civil partners and the other spouse may be entitled to claim the tax credit. These situations usually arise when one spouse has more than one type of income, although the civil partners are always treated as one unit.
Calculate your Regular Monthly Income
If you want to claim the high-income child charge tax, it is essential for you to make the necessary calculations. First, you need to calculate your regular monthly income. Add up all the salaries you receive from your regular jobs, bonuses, and commissions. You may also include your mortgage interest, savings accounts, dividends and capital gains from the sale of property, and some other sources of income.
The amount of high-income child benefit tax that you pay is dependent on the gross salary that you earn. It is essential for you to seek professional help if you are not aware of the necessary deductions and credits. It is recommended that you seek the assistance of an independent financial advisor or a tax consultant, whom you can ask for assistance.
Reducing the Tax Burden
A lump sum payment is one way of reducing the tax burden. This method can work for both married couples and for people who have different sources of income. The method works by dividing the total income into equal monthly payments. One partner gives the money to the other partner, who in turn sends the payment to the relevant authorities. One partner can claim the lump sum, even if they have already earned the money. If one partner is not in a position to contribute money to the scheme, they can choose to receive the money as a higher interest giver instead.
There are also options to claim the lump sum through a tax refund. If you have more than one source of income, you can allocate the lump sum to receive tax rebates. However, the amount of rebate you get will be less than the amount of money you would have to pay as high income child benefit charge tax. Seek professional advice from tax advisors, if you are not familiar with this option. You can also get information and guidance note from the relevant authorities or online.
National Insurance Credits
Another option to reduce the high income child benefit charge is to reduce the number of children you have. If you are expecting twins or more, you can choose to give your parental leave to each of the children. This will reduce the amount of tax that you pay on your earnings and increase your ability to get a state pension. You can also claim the national insurance credits against the amount of your mortgage interest and loan repayments. You should also consider the tax implications of getting a state pension as well as national insurance credits.
How to Minimize the High-income Child Benefit Charge
There are other ways to minimize the high-income child benefit charge. For example, you can take educational loans as per the guidelines approved by HMRC and make timely payments without deferring it. If you are self-employed or if you earn under the maximum limit allowed, you may be asked to pay the additional tax. However, if you know you cannot afford to pay the extra amount, ensure that you file the returns, pay the hicbc without delay and get the refund or the state pension that you deserve.