Parents earning up to £60,000 will have to use a self assessment tax return for the first time when claiming child benefit.
If you are living in a partnership/married to a higher rate taxpayer and earn up to £60,000 you will need to use the tax return to allow HMRC to calculate whether their will be a charge for any child benefit you received during the year.
Under rules announced in the budget, if any income in the household goes over £50,000, you will be deducted from your child benefit the equivalent of 1% for each £100 earned over the £50,000.
For example, if someone in your household earns £55,000, the following is how it is expected to work:
- £55,000 income for one parent, £10,000 income for other parent.
- One child, therefore receiving £20.30 per week (Equivalent to £1055.60) per year.
- The £55,000 income will incur a child benefit charge.
- £5,000 over the £50,000 limit, means a charge of 50% charge of the benefit received.
- In this case the £55,000 income will incur an additional charge of £527.80 when declaring their taxes.
Anyone who fails to declare the existence of a higher rate taxpayer in their family would incur a fine of up to £9,000.
From Autumn 2012, HMRC will be contacting nearly 1.8 million taxpayers who are earning more than £50,000 advising them of what to do.
They will be told to complete a tax return, if they are earning over £50,000, and asked to declare the current amount of child benefit they receive.
From January 2013, parents who have never had to complete tax returns will possibly have to.