Martin Lewis has hit out after a fan was "unfairly" charged following benefit payments from HM Revenue and Customs (HMRC).
The Money Saving Expert founder took to X, formerly Twitter, on Monday to clarify the situation as many people in the UK will face similar charges. He said: "I was just asked 'I've recently received a high income benefit Child Benefit charge. I earn £53k my wife £12.5k. Yet I've read if we both earned £49k, we wouldn't have received the charge . How is that fair?'
"That's correct. Sadly the answer is simple. It isn't fair."
Child Benefit is worth £24 a week for an eldest or only child and £15.90 a week for any additional children. Only one person can claim it for a child – so you and your partner can't both get it for the same child, for example – but there is no limit to how many children you can claim for.
The payments are tax-free unless you earn more than £50,000 a year. Once you earn over this amount you will need to pay back 1% of your family’s Child Benefit for every £100 of your income over £50,000.
These tax charges are paid via a self assessment tax return – and if you do not register for this in time or do not declare your Child Benefit on a tax return you can be fined by HMRC.
Your salary could be over £50,000, but what HMRC pays attention to is your "adjusted net income". This is the pay you’re taxed on and doesn’t include things you pay for through salary sacrifice.
You can reduce your take home pay by increasing your workplace pension contributions. You can also do this by paying into a personal pension.
If you can afford to do this, it could limit how much Child Benefit you’ll need to pay back. You might want to talk to an accountant about this for more information.
Even if you have to repay it all, it can be worth continuing to claim Child Benefit as this will ensure you get National Insurance Credits which count towards your state pension. This is particularly important if one of you isn't working or earns below the lower earnings limit for National Insurance Contributions.
Receive newsletters with the latest news, sport and what's on updates from the Liverpool ECHO by signing up here