Child Benefit rule change could cost parents dear
Parents who earn more than £50,000 and who have not opted out of Child Benefit could see an uplift in their tax bills if they fail to register for self-assessment before 5 October.
Since the beginning of this year, more than one million families have lost some or all of their Child Benefit - which is paid at a rate of £20.30 a week for the first child, with additional siblings getting £13.40 a week.
Households where one parent has an income of more than £60,000 are no longer entitled to the money at all, while those earning between £50,000 and £60,000 have seen a reduction in what they get.
The reduction works out at 1% of Child Benefit for every £100 of pre-tax income earned over £50,000.
But, confusingly, all of these families continue to receive the payments as normal and then have to pay back what they’re not entitled to through self-assessment - which means they have to complete a tax return.
Those parents who have never had to fill out a self-assessment return before must register to do so by 5 October. After which time, they may incur a penalty of anything up to 100% of what they subsequently owe on their return, depending on their previous tax history.
Those who have never been in trouble with the taxman before and who contact HMRC to register late are likely to avoid penalty, a HMRC spokesperson told Moneywise.
However, those who leave it too late and have been repeatedly warned by the Revenue could find themselves having to pay an extra 10% on what they owe on their tax bill.
Meanwhile, those parents with a record of persistent tax avoidance could land themselves with a 100% fine.
Once registered, paper tax returns must be submitted by 31 October 2013, while the deadline for online returns is 31 January 2014.
According to HM Revenue & Customs (HMRC), more than 390,000 families have already opted out of Child Benefit this year.
You can register for self-assessment online at hmrc.gov.uk.