You’ve probably heard in the news about the risk to hundreds of thousands of families who will lose child benefit payments this year.
Under the proposals, households in which one parent earns more than £50,000 will lose some or all of their child benefit, which is worth more than £1,700 a year for a family with two children.
Lin Homer, chief executive of Her Majesty’s Revenue and Customs (HMRC )said more than 200,000 families still needed to register for the self-assessment tax forms as part of the government’s plans to take away child benefit for higher earners.
Homer said they need to “get off their backsides” and fill in extra forms to avoid being fined by the taxman.
Many have already opted not to receive the benefit. But the rest will continue to receive child benefit payments and have some or all of it taken away through the tax system, depending on how much they earn. This could be a nasty shock for you and your family.
What do you need to do?
You should have filled in forms about your income under the self-assessment process before the deadline of 5 October, but hundreds of thousands have still not identified themselves to HMRC. Critics say the system is too complicated and that many families are still not aware that they will be affected by the changes. That’s where we can help you.
Homer believes that many families due to lose their benefit were simply being “inactive”.
“We think there are still 200,000 people who still need to get off their backsides,” she said. “If anyone’s in doubt about whether they are in this category, if they go to our website, they’ll find a calculator, they can put in details and it will give them a very clear indication of whether they are caught or not.
“There are a number of things, such as pension contributions, that can be taken off, so it’s a really good way to be absolutely sure.
“If you have done what you should have, and we’ve made a mistake, we will sort that out. For those people who haven’t taken action yet, please … register for self-assessment. If it proves not to be necessary we can always take you out. But what we don’t want people to do is face penalties just for being inactive.”
Under the changes made to the child benefit system in January, more than 1 million families are losing some or all of the value of their benefit, which is paid at a rate of £20.30 a week for the first child, and £13.40 a week for each additional child.
Households where one parent has an income of more than £60,000 face losing all their child benefit, while those with one parent earning between £50,000 and £60,000 are subject to a charge against the benefit on a sliding scale.
Happily, HMRC says that as long as parents register and file their return by 31 January 2014 any penalty for missing the deadline will be disregarded.
At Vincent & Co we have assisted people who have experienced issues with the system, so if you are one of those who need to ‘get off their backside’ please contact us and we’ll help you through it.