Child Benefit Payments – Time running out for higher income parents

The High Income Child Benefit Charge came into effect on 7 January 2013.  You are liable to pay the tax charge if in the 2012-13 tax year:

  • you have an individual income of over £50,000 a year,
  • either you or your partner received Child Benefit payments relating to the period after 7 January 2013,
  • your income for the tax year is higher than your partner’s, (the higher income is liable to pay the charge if both partners have income over £50,000).

If you stopped receiving Child Benefit payments before 7 January 2013 you do not need to take any action.

However, if you did not stop your payments until after 7 January, or if you are still receiving Child Benefit and you have an income over £50,000, you must register for Self Assessment for the 2012-13 tax year by 5 October 2013.  This will enable you to declare the Child Benefit received, pay any tax charges on time and avoid penalties for failure to notify HMRC on time.

HMRC say that they are sending letters out to around two million higher rate taxpayers, including those affected by recent changes to Child Benefit.

HMRC’s Chief Executive, Lin Homer, said:

“HMRC wants to ensure that people avoid possible penalties and pay the right amount of tax. If you had any additional income last year, or have been affected by the changes to Child Benefit, you have until 5 October to register for Self Assessment.”

Apparently, over 400,000 people with higher incomes have already opted out of receiving Child Benefit payments.

People who fail to register could face a penalty of up to 100 per cent of the tax due, depending on the circumstances. They might be able to come out of Self Assessment in future years if they (or their partner if they are the Child Benefit recipient) choose to opt out of receiving Child Benefit and avoid incurring the tax charge.

To opt out, visit HMRC’s Child Benefit Charge Page:  http://www.hmrc.gov.uk/childbenefitcharge

More information on whether you need to register for Self Assessment can be found at: http://www.hmrc.gov.uk/yourtaxreturn

 

 

Author:

I’m Mary Cummings, a ghostwriter, collaborator and all round word doctor. I help business owners write and publish business books; I'm also passionate about helping creative freelancers find work that they love - their work sweet spot with work on their terms, projects they love and clients who are a dream to work for.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.