High Income Child Benefit Charge Payment Plan – A Tool for Maintaining Quiet Tax Payers
Accountancy firms in the UK and throughout Europe offer a variety of high-income child benefit charge plans to their customers. As most accountants are well aware, the more complex the tax rules and policies that govern high income child benefit, the more complex the tax returns that firms produce. Therefore, for clients who require high income child benefit but do not need to engage in any high risk investing or asset management ventures, they can consider self-settled accounts. However, if the client requires a professional form of accountancy, the accountancy firms generally prefer to offer their clients the professional services of an accountancy firm that has its local presence.
Regressive Tax Charge
Back, to the HICBC. The High Income Child Benefit (HICBC) is a regressive tax charge that applies only to the second highest taxable income recipient of a family in UK. The second income recipient is defined as the person who would have been eligible to receive the benefit under the original agreement between the parents if they had both remained in UK. HICBC does not consider the partner’s potential return to work in UK nor does it consider the potential return to the parent or the dependents of the dependent in UK if the person were to become financially independent in the future. Where a dependent does not have an equivalent domestic partner in UK, the HICBC considers the dependent’s potential return to work in UK to be the dependent’s potential income in its entirety in the future.
For spouses who do not reside in UK, their property will be transferred to the spouse who does live in UK. The transferred property will then be subject to the laws of UK including the tax laws relating to HICBC. In this respect, one partner may have access to adjusted net income, subject to the other partner being unable to claim that income and that access may vary. It may also be subject to specified conditions. For instance, where one partner is considered to be permanently resident and the other is not, one partner’s adjusted net income will be taxed immediately by the Canadian authorities to the other partner will have to wait for three consecutive months after arriving in UK before the adjusted net income is taxed.
Feature of the HICBC
The major feature of the HICBC is that it does not permit the taxpayer to exceed the limits of the allowance once reaching the age of sixty-five. The only exception to this principle is where the child has become eligible for social assistance benefits as well as the national health system. Then, only then can the tax credit to be claimed. If the parent works outside the province, the social assistance system will cover the cost of the child’s medical expenses and prescription drugs. If the parent works within the province, a prescription drug benefit may be available as well.
One of the most fundamental differences between a private and a corporate charity is that the former does not have a chartered accountants’ committee. Private high school charters are generally funded by private individuals and corporations. Charitable organizations have to obtain donations from individuals or organizations and then spend the money for their programs and projects. For this reason, there is no possibility of political interference in the operation of a hick.
The major feature of the HICBC versus the pension contributions is that individuals making contributions to both plans are required to make their initial assessment on their income using the federal income tables provided by Statistics UK. These assessments are based on the Statistics UK survey results and are hence open to reasonable interpretations. This ensures that the individuals contributing to both plans have an accurate picture of their future income. Unlike the private pension plans, individuals do not have to wait for six consecutive months in order to claim the pension payments.
Income Tax Payable
In the UK, there is a different method of calculating the income tax payable by individuals. This method is used to determine the eligibility of individuals for both the HICBC and the pension plans. Basically, the income tax year is determined by taking off the year that is nearest to the end of the current tax year. This calculation is made according to one’s marital status, age, income, the standard of living, employment, claims, dividends, capital gains, and other financial commitments, as well as other relevant factors. This is the same procedure used for calculating the consolidated tax year. The result of this calculation is the amount of income tax payable by an individual for the year.
Rates of Return
One can calculate his/her income tax liability using either the single premium or double premium HICBC, as per the rules of the plan. The rates of return depend on the level of cover provided to the investor. There are several other terms related to the HICBC, which are explained in the guidelines issued by HMRC. These include the excess amount fund, the modified excess amount fund, and the modified underwriter bond rate.