Family income shock

FIVE-MINUTE GUIDE TO... CHILD BENEFIT TAX CHARGE

- Harvey Jones

OUR complex tax system is riddled with unfairness and one of the cruellest quirks sees some families paying an effective 65 per cent tax rate on their income.

This affects hundreds of thousands of parents who are receiving child benefit, and may already be struggling due to the cost-of-living crisis.

Child benefit is paid to parents who are responsible for bringing up a child who is either under 16, or under 20 if in approved education or training.

It is worth £21.80 a week for the first child, and £14.45 a week for any subsequent children. Although it is not means tested, if one earner in a family makes more than £50,000 a year, they must pay back 1 per cent of the child benefit they receive for every £100 of income over that threshold.

Once one parent makes £60,000 or more, they have to repay all of the child benefit.

This is known as the high income child benefit tax charge (HICB), a stealth tax introduced by former chancellor George Osborne in 2013.