Tx notes fa22 Final

 
Example 16 
Elton is a higher rate taxpayer (but with an adjusted net income of 
≤
£100,000). This includes 
£20,000 of rental income on a property owned entirely by Elton on which he pays tax at 40%, a tax 
liability therefore of £8,000 thereon. David his civil partner has no income.
Discuss how Elton and David could reduce their income tax liabilities 

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8. Child Benefit Income Tax Charge 
Child benefit is a tax free benefit payable to parents irrespective of the level of taxpayer they may be.
An income tax charge applies if a taxpayer or his/her partner receives child benefit but one of them 
has adjusted net income (ANI) > £50,000. 
If both partners have income over £50,000 the partner with the higher income is liable for the charge.
The following information will therefore be provided in the tax rates and allowances section of the 
examination paper:
Where income is between £50,000 and £60,000 the charge is 1% of the amount of child benefit 
received for every £100 of income over £50,000.
Illustration 1 
Catherine received child benefit of £1,056 in 2022/23 and has ANI for the year of £54,000.
As Catherine’s ANI is between £50,000 and £60,000 the child benefit income tax charge is £422 
(£1,056 x 40% (54,000 – 50,000 / 100))
Illustration 2 
Victoria receives child benefit of £3,147 in respect of her 4 children and has ANI of £77,000.
As Victoria’s ANI exceeds £60,000 the child benefit income tax charge is £3,147, being the full 
amount of the child benefit received.

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