ACT NOW TO AVOID FINES LATER
If you get child benefit and you or your partner has an income above
£50,000 then the one with the higher income has to register for self-assessment
and pay the tax due on it.
The Chief Executive of Her Majesty’s Revenue & Customs (HMRC) Lin Homer
recently told people to ‘get off their backsides’ and register before the
deadline which was 5 October. But in fact as long as you get ON your backside in
front of your computer you can still avoid any fines for being late.
If you got child benefit between 7 January and 5 April 2013 and you or
your partner (husband, wife, civil partner or live in lover) had a taxable
income in 2012/13 of more than £50,000 then the person with the higher income
will pay tax to take away some or all of the child benefit received. The tax
will equal the child benefit if one partner has an income over £60,000. Between
£50,000 and £60,000 the tax is on a sliding scale – so for example an income of
£55,000 will mean tax is half the child benefit.
The assessment is done on the higher income. The other income is ignored.
Two partners who both have £50,000 will not have to pay. But one with an income
over £60,000 will pay the full tax. A partner’s income is counted even if they
are not related to the children. The same rules apply for this tax year 2013/14.
In order to pay the tax you have to register for self-assessment and fill
in an online form by 31 January. The tax is also due on that date. You should
have registered by 5 October – but that date has passed. So in theory you could
be liable to a fine for ‘failure to notify’ which can be up to 100% of the tax
due. However, as long as you meet the 31 January deadline for registering,
filling in and submitting the form and paying all the tax due then the fine will
be zero.
The income that is used for the assessment is called ‘adjusted net
income’ though in fact it is basically your taxable income. You can find that
figure on your P60 which your employer gives you at the end of each tax year. If
it is £50,000 or less you can relax! If it is more you may still not have to
pay. Deduct from it any pension contributions made outside work and any Gift Aid
donations to charity (gross both up before you take them away). If the result is
£50,000 or less then again you won’t have to pay the charge or register for
self-assessment. If it is more than £60,000 then the tax will equal the child
benefit.
All the
weird child benefit high income charge rules are explained in my blogpost
http://paullewismoney.blogspot.co.uk/2012/11/child-benefit-high-income-charge.html
Or find your way through the HMRC pages
http://www.hmrc.gov.uk/childbenefitcharge/
and use the useful calculator at
https://www.gov.uk/child-benefit-tax-calculator
Go back to Paul Lewis front page