Child Benefit opt-out now reversible
Benefit tax recap. From January 7 those entitled to Child Benefit, where they or their partner have annual income exceeding £50,000, will have some of this clawed back through the tax system (yr.12, iss.14, pg.4, see The next step). And where their income exceeds £60,000, the entire amount of benefit will be lost through extra tax.
Opt out. Where you expect to lose all your Child Benefit you can avoid the tricky clawback procedure by opting not to receive it in the first place. But under the original plan this option was irreversible and so, if for any reason your income fell below £60,000, you would have lost the right to claim it.
Opt back in. The good news is the government has changed its mind and where you have opted out of receiving Child Benefit you’ll have two years from the end of the tax year concerned to change your mind and opt back in (see The next step).
For a previous article on Child Benefit (TX 13.05.08A) and for a weblink to HMRC’s guidance on opting out and back in (TX 13.05.08B), visit http://tax.indicator.co.uk.