Parents whose individual income exceeds £50,000, and yet still receive child benefit, must register for self-assessment with HM Revenue and Customs (HMRC) within the next four weeks or face a hefty fine.
The £50,000 threshold for parents’ individual household income can include a mix of salary and dividend payments.
Perhaps the most controversial aspect of child benefit is that couples each earning £49,000, with a household income of £98,000, could still be entitled to receive 100 per cent of their child benefit, allowing them to earn far more than a family whose sole breadwinner earns £60,000, and loses his or her benefits altogether.
Nevertheless, HMRC has issued a reminder informing parents to register before the October 5th deadline or risk a penalty of up to 100 per cent of the tax due on benefits.
Registering with HMRC prior to the deadline will enable claimants to avoid the ‘failure to notify’ fine, declare the benefit received and pay the tax charge outright; 10 per cent of the benefit payment will be deducted for every £100 earned over £50,000.
Letters from HMRC are being sent out to around two million higher rate taxpayers, including those previously affected by Child Benefit changes, reminding them to pay the High Income Child Benefit Charge which came into effect on January 7th 2013.
An HMRC spokesperson said: "People who fail to register could face a penalty of up to 100 per cent of the tax due, depending on the circumstances.
"They might be able to come out of Self Assessment in future years if they (or their partner if they are the Child Benefit recipient) choose to opt out of receiving Child Benefit and avoid incurring the tax charge."
For more information on whether you’re liable to the High Income Child Benefit charge visit HMRC’s introduction section.
Call us today on 0800 0523 555 or complete our enquiry form and we will identify your nearest TaxAssist Accountant in order to book a FREE initial consultation