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Newly cohabiting couples, where at least one of the partners is a parent, have been warned by a leading insurer to be aware of a new tax charge, if either earns more than £50,000 a year.
NFU Mutual has said that cohabiting couples need to be aware of the High Income Child Benefit Tax Charge, which sees Child Benefit payments made to either the high earner or his or her partner recouped progressively on income between £50,000 and £60,000.
Notably, the charge applies regardless of whether the higher earner is the parent of their partner’s child and regardless of whether the couple is married, civil partnered or cohabiting.
Another feature of the charge is that it applies to one partner’s income, meaning that a couple with a combined income of nearly £100,000 would not be subject to the charge, while a couple with an income of £50,000 from only one partner would be subject to the charge.
While parents can opt-out of receiving Child Benefit, stay-at-home parents of children aged up to 12 can qualify for National Insurance credits that contribute towards their entitlement for the state pension.