Child Benefit and the High Income Child Benefit Charge 18 October 2019
The Office of Tax Simplification have published suggestions surrounding how to make elements of the High Income Child Benefit Charge (HICBC) more transparent to those that it affects and to make them aware of the benefits of claiming Child Benefit even if they do not receive the associated payments. The document published on 10 October 2019 stated that the link between Child Benefit and maintaining National Insurance contributions needs to be more widely publicised and explained as a number of people are missing out on this. If an individual or their partner earns in surplus of £50,000 per year, a tapered tax charge applies to the child benefit and once the earnings exceed £60,000, the charge is equivalent to the monetary amount of that benefit. At this point, many decide that it is not advantageous to claim the benefit as they are not well informed about the implications this may have on their National Insurance records. The additional positive aspect to claiming but not receiving payments relating to Child Benefit arises from the fact that it is the main method by which children are allocated with a National Insurance number upon turning 16. The document comments on the administrative burden that could potentially be placed on the Department of Work and Pensions (DWP) if there is a surge in the number of individuals requiring an NI number whose parent(s) were not claiming Child Benefit. It also seeks to find resolutions for backdating NI contributions for any who were not aware of the effect of not claiming the benefit on their National Insurance record.
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Amendments to timings surrounding Tax-Free Childcare payments 21 October 2019
The Childcare Service Team at Gov.UK has confirmed that, should you pay funds into your Tax-Free Childcare (TFC) account via bank transfer, the time taken for the monies to reach your designated childcare provider will be significantly reduced. This will be a welcome change for affected parents as currently, it can take up to three working days for transferred funds to arrive at their intended destination. Payments that exceed £2,000 will still be subject to the potential three working day maximum transfer period. If you make a deposit by bank transfer, it will now take approximately two hours for the funds to reach your childcare account, the government top-up is instantly applied and will appear immediately in ‘available funds’. If payments are made to the relevant childcare provider prior to 2:30 PM, they will receive the monies the same day but if they are sent after 2:30 PM, or on a weekend or bank holiday, they will arrive in the provider’s account the next working day. Tax-Free Childcare was implemented to support the fact that entitlement to join Childcare Voucher schemes ceased in October 2018. It was intended that this would eventually replace the requirement for Childcare Voucher schemes. The latest edition of the Employer Bulletin discusses the issue of ‘stockpiled childcare vouchers’ and explains the obligation on employers to advise employees in relation to the value of childcare vouchers they have. This is because circumstances may have changed which means they can no longer utilise those vouchers or because the vouchers will soon expire. There are also some helpful frequently asked questions providing advice for employers on both Tax-Free Childcare and Childcare Vouchers.
CIPP comment
The CIPP is still part of the Tax-Free Childcare implementation forum, so if there are any comments, concerns or positive feedback on this area, please contact the Policy team so that we can share your thoughts and ideas and potentially shape the future of TFC.
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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