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ACCA Applied Skills · Taxation (UK) · The scope of income tax

Which statement about the child benefit income tax charge is correct?

The charge is 1% of the child benefit for every £200 of income above £60,000. Across the £60,000 to £80,000 band this builds to 100%, so the full benefit is charged at £80,000 of income.

  1. AThe charge is 1% of the child benefit for every £200 of income over £60,000, reaching 100% at £80,000Correct
  2. BThe charge is 1% of the child benefit for every £100 of income over £50,000
  3. CThe charge applies only where income exceeds £125,140
  4. DThe charge is 20% of the child benefit once income exceeds £60,000

Explanation

Where income is between £60,000 and £80,000 the charge is 1% of the benefit for every £200 over £60,000. This gives 100 blocks across £20,000, so the full benefit is charged at £80,000. The other options use incorrect thresholds or rates.

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