Aug 2013
30
To Avoid Child Benefit Tax Trap – Parents Must Act Now - HMRC
Although approximately 400,000 people with higher incomes have opted out of receiving Child Benefit, parents on higher incomes who still receive Child Benefit must register with HMRC for self assessment by 5th October to avoid a steep penalty.
HMRC is currently writing to 2 million high rate taxpayers reminding them that if their income is above £50,000 and they or their partner have received Child Benefit in the tax year 2012/13, they are required to complete a self assessment tax return and pay the High Income Child Benefit tax charge.
If they fail to do so and this was intentional, HMRC says it may levy a penalty of between 10pc and 100pc of the amount due.
Introduced on 7th January this tax commences when one person earns an annual income of £50,000. Households with one person earning £60,000 or more lose the payment completely. Child Benefit is worth £20.30 a week for the first child and £13.40 a week for every sibling.
HMRC estimates around 600,000 people will be affected by the charge, which has been widely criticised as unjust because households where both partners earn £49,000 are able to keep the full payment.
If you opted out from receiving Child Benefit then no further action is required.
A spokesperson for HMRC stated, "HMRC is committed to helping people pay the right amount of tax. If you have had certain changes to your income in the last year, including those affected by the changes to Child Benefit, you have until October 5 to register for self assessment."
