Thousands of families who claim Child Benefit have just days left to avoid being slapped with a fine for missing the self-assessment tax return deadline.
Parents and carers who are subject to the High Income Child Benefit tax (HICBT) must register for self-assessment tax returns by October 5.
High Income Child Benefit tax is a charge that applies to anyone with an income over £50,000 who gets Child Benefit, or whose partner gets it.
If your income is between £50,000 and £60,000, you pay 1% of your Child Benefit for every £100 of income within this threshold.
Earn over £60,000 and you'll need to pay back 100% of your Child Benefit - meaning you don't get anything.
If you fall into the HICBT bracket, you must submit a tax return to pay the charge - even if you normally pay tax through the PAYE system.
We explain how to do this below.
The penalties for "failure to notify" that you owe the HICBT charge - which could come on top of the actual tax you need to pay - can range from 10% to 30% of the tax owed, plus interest.
If you have a reasonable excuse for a non-deliberate failure to notify, HMRC will not charge you a penalty.
Sean McCann, chartered financial planner at NFU Mutual, said: “Anybody whose income has increased to take them above the £50,000 threshold should check if they’re liable for this tax.
“As well as parents, it may also be payable by individuals who move in with a lower earning partner who claims child benefit.
“Many employees paid through PAYE may not have registered for self-assessment before, so this is an important deadline to be aware of.
“Not only will HMRC chase families who don’t pay the tax, they may also add additional penalties.”
Were you aware of the High Income Child Benefit Charge? Let us know in the comments below
How to pay High Income Child Benefit Charge
To pay the HICBT charge, you must first register for self-assessment by October 5.
You can do this online on the Gov.uk website. To do this, you'll need a Government Gateway sign in, which is free to set up.
Once you've registered, you'll then have to send in a tax return every year so HMRC know how much you should be charged.
If you're in a couple and you both earn over £50,000, the person with the highest income must complete the self- assessment.
Not sure if you need to pay HICBT? You can call HMRC directly on 0300 200 3100 to ask.
If you don't want to pay the charge, you can opt out of Child Benefit payments altogether by contacting HMRC.
However, it’s important that any non-working parents still make the initial claim for Child Benefit before opting out.
This is because someone who receives Child Benefit for children under the age of 12 is also treated as if they had paid National Insurance contributions.
You need a certain amount of NI credits to claim the state pension in later life, so it's important not to miss out on these.
You need at least 10 years’ worth of NI contributions to get any state pension, and 35 years to get the full new state pension.
What is Child Benefit?
Child benefit is money paid to parents or carers who are responsible for a young adult.
If you or your partner earn less than £50,000 per year, you can claim the full amount of child benefit.
You get £21.15 a week for your first child, then any other child you have qualifies for £14 a week each.
You need to live in the UK and be responsible for someone under the age of 16, or under 20 if they’re in approved education or training, to claim Child Benefit.
You’ll stop receiving child benefit if your child:
- Starts paid work for 24 hours or more a week and is no longer in approved education or training
- Starts an apprenticeship in England
- Starts getting certain benefits in their own right
Recent figures issued by the charity Turn2Us show 503,000 families are missing out on unclaimed Child Benefit payments worth a collective £775million.
