Register For Child Benefit Even If The HICBC Applies

November 2021 By

If you are responsible for bringing up a child who is under the age of 16, or under the age of 20 where they remain in approved education or training (such as A levels but not education at an advanced level, such as university), you can claim child benefit. Only one person can receive child benefit in respect of a particular child.

For 2021/22, child benefit is payable at the rate of £21.15 for the eldest or only child, and at the rate of £14 per week for any additional children. It is paid every four weeks.

HICBC

The High Income Child Benefit Charge (HICBC) applies to claw back child benefit paid where the recipient, or their partner if they have one, has ‘adjusted net income’ of £50,000 or more. This is income before personal allowances and deductions for items such as Gift Aid.

The HICBC works by clawing back 1% of the child benefit paid for every £100 by which adjusted net income exceeds £50,000. Where adjusted net income exceeds £60,000, the HICBC is equal to 100% of the child benefit paid in the tax year.

Who pays the tax?

Where both the claimant and the claimant’s partner have adjusted net income in excess of £50,000, the HICBC is payable by the person who has the highest adjusted net income. If only one of them has adjusted net income in excess of £50,000, then that person is responsible for paying the tax. This means that the person on whom liability for the HICBC falls is not necessarily the same person who has received the child benefit.

For the purposes of the charge, a person is a partner of the claimant if they are married to the claimant or in a civil partnership with the claimant and not permanently separated, or someone who lives with the claimant as if they were married or in a civil partnership. The charge will apply regardless of whether the claimant’s partner is biologically related to the child in respect of whom the child benefit is paid, or is responsible for that child.

Elect not to receive child benefit

To eliminate the need to repay child benefit received in the form of the HICBC, where the charge is equal to 100% of the child benefit, it may be easier to elect for this not to be paid. Where child benefit is already being paid, the claimant can opt out of payments by completing the online form or contacting HMRC by post or by phone.

Register to benefit from National Insurance credits

Where HICBC applies but the claimant would not otherwise pay sufficient National Insurance contributions for the year to be a qualifying year for state benefit purposes (for example, where the claimant does not work or has low earnings and the HICBC is payable by the claimant’s partner), it is important for the claimant to register for child benefit in order to receive National Insurance credits to preserve their state pension entitlement. These are available where a person is registered for child benefit in respect of a child under 12.

At the time of registering, the claimant can elect for the child benefit not to be paid, where this is preferable to receiving it and paying the same amount in the form of the HICBC.

Partner note: ITEPA 2003, Pt. 10, Ch. 7 (ss. 681B – 681H); SSAA 1992, s. 13A.

Electric charging points – Is there a tax liability?

As part of the Government’s push to encourage drivers to ‘go electric’, the Transport Secretary, Grant Shapps, announced an extension to a £50 million Government fund to install electric charge points. The fund aims to help small business to gain access to the workplace charging scheme and provide grants to meet up to 75% of the cost of installing electric charging points at domestic premises.

While tax advantages are available where employees opt for an electric company car, does a tax charge arise if an employer provides a charging point to enable employees to charge their own cars at work?

Workplace electric vehicle charging

A tax exemption applies to remove the charge that might potentially arise where an individual charges the battery of a vehicle that is used by the employee.

Private vehicles

The exemption means that an employee is able to charge their own car, or one that they are driving or a passenger in, using a workplace charging free of any associated benefit in kind tax charge. There is no requirement that the electricity provided is used for business journeys; the exemption applies regardless of whether the charge powers business or private journeys.

The exemption covers:

  • the cost of the electricity;
  • the cost to the employer of providing the charging facilities; and
  • any connected services.

However, the exemption only applies if the following conditions are met:

  • the charging facility is provided at or near the employee’s place of work;
  • charging must be available to all the employees generally or those at the particular workplace should they wish to use the facilities; and
  • the vehicle which is charged is one in which the employee is the driver or a passenger.

Company vehicles

Likewise, no tax charge arises if an employee uses a workplace charger to charge an electric company car. There would, in any event, be no tax charge in respect of electricity provided for business journeys. However, as electricity is not treated as a ‘fuel’ for company car purposes, the use of a workplace charging facility does not trigger the fuel benefit charge if the charge provided powers private journeys.

Offsite charging

The tax exemption does not apply to the reimbursement or payment of an employee’s personal expenditure in respect of charging a battery in a private vehicle away from the employer’s premises, for example, at a motorway service station. Where the vehicle is used for business journeys, mileage allowances may be paid tax-free up to the approved amount.

However, no tax charge arises in respect of the provision of electricity for a company car for private mileage as electricity is not treated as a fuel for the purposes of the fuel benefit charge.

Capital allowances

A first-year capital allowance of 100% of the expenditure is available for expenditure on electric charge-point equipment. The allowance is available for expenditure incurred before 1 April 2023 for corporation tax purposes and before 6 April 2023 for income tax purposes.

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