Parents need to act now on child benefit tax charge – or face penalties
Child benefit is paid to the parents and guardians of children up to age 16, and children aged 16 to 19, if they stay in approved full-time education or training. It is £21.05 per week for the eldest child and £13.95 per week for each younger child.
High income child benefit tax charge
The high income child benefit tax charge was introduced in 2013 and affects families where one parents earns more than £50,000 a year.
Those with income over this figure are required to pay 1% income tax on the child benefit for each £100 of income above this. This means the value of child benefit is eroded to nil once the taxable income of one of the adults exceeds £60,000.
Today is the deadline for parents who are in receipt of child benefit to register with HMRC if they want their high income child benefit tax to be assessed through adjustment of their tax code rather than having to file a self-assessment return.
Kay Ingram, director of public policy at national financial planning group LEBC, says: “Some parents choose to waive the benefit to avoid the tax charge. This year many parents may have seen their income disrupted as a result of a loss of earnings triggered by lockdown.
“They may no longer have to pay the tax and those who have waived child benefit may wish to claim it again. Payment can only be backdated for three months, so claiming sooner rather than later is clearly sensible.”
Those parents who miss today’s deadline will have to file a self-assessment tax return.
The deadline for paper self-assessment tax returns is 31 October, while online tax returns must be done by 31 January.
Penalties can be incurred if you miss these dates.