High earning parents get tax reminder
Higher earning parents who have been claiming child benefit since January this year have until 5 October to register for tax self-assessment (if they aren't already) to avoid any High Income Child Benefit Charge penalties.
HM Revenue and Customs (HMRC) is writing to around two million higher rate taxpayers to remind them that if their or their partner’s income was more than £50,000 and either received child benefit in 2012-13, the higher earner may need to register for self-assessment if they have not already done so, and to complete a self-assessment tax return for the 2012-13 tax year.
More than 390,000 people with higher incomes have already opted out of receiving child benefit following the introduction of the High Income Child Benefit Charge from 7 January this year, and they need take no further action.
A taxpayer is liable to pay the new charge if in the 2012-13 tax year:
> he/she had annual income of over £50,000
> he/she or his/her partner received any child benefit payments after 7 January 2013, and
> his/her income for the tax year is higher than his/her partner’s. (The partner with the higher income is liable to pay the charge if both partners have income over £50,000.)
The charge reduces child benefit by one per cent for every £100 of income between £50,000 and £60,000. Taxpayers with income above £60,000 must repay all their child benefit.
If the charge applies, registering for self assessment by 5 October 2013 will enable taxpayers to declare child benefit received, pay the charge due and avoid penalties. Once registered, they will need to either file a paper tax return by 31 October 2013 or an online return by 31 January 2014 to avoid late filing penalties.
If in doubt about the rules, individuals should seek professional advice to avoid problems further down the line.
For further information, please contact Susie Campion at the office.
Author: Susie Campion FCCA
Educated at Lancaster Girls' Grammar School, Susie joined Scott & Wilkinson in 1995 and qualifed as an accountant in 2002. As a Partner, Susie’s specialisms include managing the firm's large group audits and leading on staff...
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