A million families will lose the next thousands of years due to additional child benefit fees

More than a million families will lose thousands of pounds next year due to additional child benefit charges.

The cash available to help when you have children must be returned when you earn more than a certain amount.

More families are expected to be taxed on high-income child gains next year


More families are expected to be taxed on high-income child gains next yearCredit: Getty

About 1.6 million people will be affected by this limit next year – equivalent to one in five families.

This is up from one in eight people affected when the rules were first introduced in 2013, according to calculations by the Institute for Fiscal Studies.

Children’s rights worth £84.60 a month for the first child – or just over £1,000 a year – and £56 a month for an additional child.

If either parent earns more than £50,000, they must pay a high-income child benefit tax.

This means you pay back 1% of your child benefit for every £100 of income above this amount.

When you reach £60,000 in earnings, you must repay the full amount.

The reduction applies when only one parent or guardian earns more than the threshold, but not above the combined household income.

The amount has remained flat for nearly a decade, but in that time wages have risen, leaving more families in the tax trap.

And although the fee is designed for high earners, thousands of them are currently affected basic rate taxpayers.

A higher tax rate (40%) applies to income over £50,271. Around 120,000 families have income below this but more than £50,000 have to repay some of the benefits.

It comes as families face higher cost of living due to rising food and energy costs – Bank of England predicts that Inflation could fall by 5%.

Surprise bill

Parents get caught up in complicated rules and extra fees and landed with bills in the thousands of pounds.

One parent, Jason Wilkes, challenged the rules in court after being asked to repay £4,000.

Parents must notify HMRC if they are subject to this fee and they must submit a self-assessment tax return for payment.

Parents who are aware of this fee could also lose cash.

They may decide to opt out of the full benefit to avoid paying back. But they will miss out on National Insurance credits.

These fill the gap in NI contributions while not working and count towards the state pension you receive in retirement.

An old lady lost £800 a year in state pension payments after missing out on credits.

Credits can be passed on to the family that is babysitting – but only if the parents claim the credits through child benefit in the first place.

Sir Steve Webb, former pensions minister and now consultant at LCP, told The Telegraph charges up to a “stealth” tax.

“More and more families are being dragged into the net of this so-called high-income fee,” he said. Household budgets are coming under increasing pressure with rising inflation and this sneaky tax will only make matters worse. “

A government spokesman told the paper the cap was meant to ensure children’s benefits were delivered to “those who need it most” and that they were spending billions of pounds to help with the cost of living, such as fuel freezes and taxes.

Turn2Us Charity Adviceending using government child benefit tax calculator to see how you might be affected by high income tax rates.

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Bobby Allyn

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