Your entitlement will now depend on you and your partner's income:
If either of you earn over £60,000 a year, you will have lost your child benefit entirely.
If either of you earn over £50,000 a year, you will see it gradually withdrawn depending on how much you earn.
If both you and your partner earn under £50,000 a year you keep all of your child benefit payments.
However, you should still make sure you are claiming any tax credits or benefits you are entitled to.
If either you or your partner earn over £60,000 you will lose child benefit in full.
If you or your partner earn between £50,000 and £60,000 you will lose 1% of your child benefit payments for every £100 you earn above the £50,000 threshold - so for example if you earn £55,000 you will lose 50% of your child benefit.
The taxman will take earnings from your main job, any other jobs you have, rental income and anything you earn from savings and investments into account when they are calculating how much you should lose.
No, this is the confusing part; even if you earn over the £60,000 payment threshold your child benefit will continue to be paid as normal.
Instead, if you are a higher earner the government will take the equivalent value back through an additional Income Tax charge:
If you earn over £50,000 this additional Income Tax charge is equal to 1% of your child benefit for every £100 you earn above £50,000.
If you earn over £60,000 this additional Income Tax charge is equal to your entire child benefit entitlement.
If both you and your partner earn over £50,000, the additional Income Tax charge is applied to whoever earns the most, regardless of who the child benefit is paid to.
You can find out how much Child Benefit you will receive in a tax year, and what additional income tax you may have to pay by using the Gov.UK Child Benefit tax calculator.
To pay the tax you will need to complete a Self Assessment tax return each tax year. If you do not already, or you have only recently entered the higher earner bracket, you can register for Self Assessment on the Gov.UK website. You may be charged a penalty if you fail to do this.
If your ex-partner earns over £50,000 but you receive child benefit for your children you will be permitted to keep the payments in full (providing you earn under the £50,000 threshold).
Equally if you earn over £50,000 but have separated from a partner who claims child benefit for your children you will not have to pay the additional Income Tax charge.
If you and your partner separate after the change takes effect you will no longer be liable to pay the additional Income Tax charge. This will take effect from your date of separation, rather than the end of the tax year - so you will need to inform HMRC accordingly.
If you want to avoid the additional Income Tax charge, or do not want your partner to have to pay the tax because you receive child benefit, you can opt to stop your child benefit payments by notifying HMRC.
If you do this you should still complete a child benefit application if you have any more children, even if you do not want to claim child benefit for them.
This is because your child benefit entitlement affects whether you qualify for National Insurance credits and could affect whether you will be able to claim a full state pension.
For more information about National Insurance credits visit the Gov.UK website.
The only way to reduce the amount your additional Income Tax charge you need to pay while keeping your child benefit is to reduce your taxable income. This can be done by:
Making additional payments into any personal pension
Purchasing childcare vouchers
Both of of these options qualify for tax relief.
However, while the original child benefit cuts would have seen higher rate tax payers just over the threshold lose thousands of pounds worth of income, the gradual charge applied through the additional Income Tax charge had made this a much softer and gradual process.
Consequently the benefit of paying extra into a pension or purchasing childcare vouchers are less pronounced than before (though potentially still worth doing).
If you do not already pay into a pension, then this could be another incentive which could make saving for your retirement more appealing.
Equally, if you are paying a considerable amount in childcare costs, purchasing childcare vouchers would again see you face a smaller additional Income Tax charge as well as benefitting from the other tax perks available with childcare vouchers.
You will need to carefully consider whether this is a strategy that will work for your family and should take some financial advice if it is something that you are considering.
For those that earn between £50,000 and £60,000, paying an additional £100 into your pension each month will only equate to a 1% reduction of your child benefit via the Income Tax charge.
Depending on your circumstances, terms of employment and the additional Income Tax charge you face, registering as a private limited company could help you avoid the child benefit changes.
This involves creating a private limited company to cover your work, paying yourself a minimum wage salary and declaring the rest of the money you earn each year as a dividend.
However, this is only really a viable option for the self-employed, freelancers or consultants not directly employed by a single company.
If you are a full time employee of a single company with a fixed annual salary this just is not an option, and is in fact illegal.
Even if you do fit into the right employment category, registering as a private limited company and altering your personal tax liabilities so drastically is not an easy option and should only be done with the aid of a qualified accountant.