ACCA Applied Skills · Taxation (UK) · The scope of income tax
Mark receives child benefit of £2,000 for the tax year. His adjusted net income is £70,000, and his partner's income is below £60,000. Using the child benefit income tax charge rule of 1% of the child benefit for every £200 of income over £60,000, what is Mark's income tax charge?
The charge is £1,000. Income exceeds £60,000 by £10,000, which is 50 blocks of £200. Each block gives a 1% charge, so 50% of the £2,000 child benefit received is clawed back through the income tax charge.
- A£500
- B£1,000Correct
- C£1,500
- D£2,000
Explanation
Income over £60,000 is £10,000. £10,000 / £200 = 50, so the charge is 50% of the child benefit. 50% x £2,000 = £1,000. The £2,000 option wrongly applies a 100% charge, which only arises at £80,000 or more.
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