If you or your partner receive child benefit, check whether you have to pay a tax charge to pay back some of the child benefit received. Where the higher earner of a couple has income over £60,000, the extra tax charge for that person is equivalent to 1% of the child benefit for every £200 of their income over £60,000. Once income reaches £80,000, the charge is 100%. Therefore, the child benefit claim is effectively reduced to nil. The tax charge is collected under self-assessment. However, if you are employed, you can arrange to have the tax collected via your PAYE tax code, provided you do not have to complete a tax return for any other reason. You need to register by 31 January in the year after the tax year for which you need to pay. To avoid the tax charge, you can halt your child benefit payments but keep the claim alive to protect the claimant’s state pension entitlement. If the income of the higher earner has fallen below £60,000, you can ask HMRC to start paying the child benefit again. Don’t delay, as it can take up to 28 days before you get your first payment.
Don’t pay too much income tax on account in July and January.
If your income is reducing, perhaps because you are winding down to retirement, the payments on account of tax due by 31 July and 31 January may be too high as they are based on your taxable income for the previous tax year. You can apply to reduce the payments on account through your personal tax account or on your tax return. If you believe you have paid too much tax on account for 2025/26, then submit your tax return as soon as you can to receive an early tax repayment. TIP Estimate your income for 2026/27 and if this is likely to be less than £80,000, ask HMRC to restart your child benefit payments.
CHECKLIST
Check PAYE codes when they are changed, and also check you are not overpaying NICs Review whether an unused personal allowance can be transferred between you and your spouse or civil partner Check your NIC record if you think there might be recent gaps Consider using savings if you are going to have any difficulty making tax payments by the due date Review whether you have to pay a tax charge in respect of child benefit received, or whether a halted claim should be restarted Make sure that your payments on account are not higher than they need to be
EXAMPLE Anna receives child benefit in respect of her two children and until recently made an annual profit of £80,000 from her self-employment. Some years ago, she asked HMRC to halt her child benefit payments so she didn’t have to pay the tax charge. Anna predicts her net profit will be around £55,000 for 2026/27. Anna can ask HMRC to restart her child benefit, and – provided the request is made early enough – she will receive payments throughout 2026/27.
Made with FlippingBook. PDF to flipbook with ease