HMRC clarifies how tax codes will work under after Child Benefit rules change | Personal Finance | Finance
HMRC has explained how tax codes will change for those affected by changes to Child Benefit.
As announced in the Spring Budget, the income threshold for the High-Income Child Benefit Charge has increased from £50,000 to £60,000, with the taper limit at which all the benefit has to be repaid now at £80,000.
A dad asked the tax authority over X: “Will tax codes be automatically updated to reflect changes to the High Income Child Benefit Charge thresholds?
“The adjustment to my current tax code for 2024/25 is now out of date and I’d rather not overpay tax.”
A representative responded to first ask if HMRC had the correct details for his estimated gross pay for the current tax year.
The man said his details on file were correct as he had updated his estimated gross pay for the current tax year.
The represetative then said: “We are aiming to get this done this month. So long as we have the correct estimate of income you don’t need to do anything more.”
he charge applies when an individual in a claimant household has an income above the threshold, after which they have to start paying back the benefit.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said when the rule change was announced: “The Child Benefit rules that penalised single parents were always incredibly unfair.
“It’s hard enough managing a household on a single income, without the system being stacked against you, so the decision to move to a household basis is a welcome change.
“The overall threshold for couples was raised too. After a decade of being rooted to the spot, it meant far more people were dragged into repaying this benefit – so that one in eight families faced this charge.
This will be welcome, but there was scope for a bigger rise. If it had risen with average wages since it was introduced in January 2023, it would be £71,774.”
Child Benefit payments increased 6.7 percent this month along with many other benefits.
This means claimants now get £25.60 a week for their eldest or only child and £16.95 a week each for any other children.
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