News: April 2012
How the non-taxable child benefit is to turn into taxable income!
As a complex way of restricting the child benefit to those with income up to £50,000 per year, from 7 January 2013 the benefit will be taxed. And we thought the idea was to simplify the workings of the benefits and tax systems!
There are marginal tax rate traps galore for this one, as if your income is between £50,000 – £60,000 (when the benefit is clawed back completely through the tax system) the marginal tax rate can be up to a staggering 71%! That would be the case if you have 4 children, but there are plenty of other odd and unacceptable situations when the marginal rate bites hard if your income is between those magic figures when your top tax rate should really be 40%.
Please contact us to discuss the opportunities to avoid this trap by reference to your own circumstances.