Tax self-assessment could be the new norm for many high earning families receiving Child Benefit, says ACCA

Date

29 Oct 2012

Sections

Euro & Finance
Social Europe & Jobs

Press release

New website launched by HMRC to explain new rules for High Income Child

Benefit

 

Child Benefit claimants earning more than £50,000 and over face a confusing January 2013 when new rules come into place where the taxman will charge these high earners tax to recover the Child Benefit they receive.

 

Letters to this group of people - estimated at one million families - will be sent out by HM Revenue & Customs from 3 November 2012 and a new website, http://hmrc.gov.uk/childbenefitcharge/ is launched today to help those who think they may be affected by the imminent rules.

 

From 7 January 2013, the taxman will charge individual taxpayers who have a net income over £50,000 in a tax year, where either they, or their partner, is in receipt of Child Benefit for the year.

 

If both partners – whether married or not, or living together or not - have adjusted net income over £50,000, the partner with the higher income will be liable for the tax charge. The definition of “income” has a specific meaning for the tax charge, which taxpayers can check at https://www.gov.uk/child-benefit-tax-calculator.

 

 

There are two choices to be made under the new rules:

  • keep receiving Child Benefit payments – which means they will have to pay a tax charge on the Benefit they or their partner gets; and they will have to declare the Child Benefit by filling out a tax return.
  • Or stop receiving Child Benefit payments. This clearly means no tax charge, and no need to complete a tax self-assessment return.

 

Chas Roy-Chowdhury, head of tax at ACCA, says: “The fact is that tax self-assessment could be the new norm for many families from January 2013 if they choose to keep receiving the benefit – worth £20.30 a week for the eldest child and £13.40 a week for each of someone’s other children. Taxpayers can reduce the relevant income, and the tax charge if they earn less than £60,000, by making extra pension contributions from taxed income, or giving to charity under the Gift Aid scheme.

 

“There’s been a lot of comment about how confusing these new rules are, mainly because Child Benefit can be received by someone even if they don’t live with the children for which they are claiming benefit, as Child Benefit can be paid to someone if they pay for the upkeep of their child.

 

“I’d advise seeking help or indeed calling HMRC, or working your way through their new website which is launched today.”

The website walks people through a series of ‘yes and no’ scenarios to help them find out if they are affected by the High Income Child Benefit charge. It also calculates how much they will be paying. The checker tool is here:

http://hmrc.gov.uk/tools/hicbc/checker.htm

 

 

Scenarios

  • Both partners on £55,000 per annum = charge of half the Child Benefit total amount on the

‘higher earner’;

  • One partner earning £60,000, one earning £50,000 = charge of 100% Child Benefit on the higher earner

 

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For more information, please contact:

Chas Roy-Chowdhury, ACCA Head of Tax – mobile 07710 707 516

 

Alana Sinnen, ACCA Newsroom

+ 44 (0) 207 059 5807

+44 (0) 7715 812120

alana.sinnen@accaglobal.com

 

 

Notes to Editors

1.      ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.

2.      We support our 154,000 members and 432,000 students in 170 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. We work through a network of over 80 offices and centres and more than 8,400 Approved Employers worldwide, who provide high standards of employee learning and development. Through our public interest remit, we promote appropriate regulation of accounting and conduct relevant research to ensure accountancy continues to grow in reputation and influence.

3.      Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. We believe that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. Our values are aligned to the needs of employers in all sectors and we ensure that through our qualifications, we prepare accountants for business. We seek to open up the profession to people of all backgrounds and remove artificial barriers, innovating our qualifications and delivery to meet the diverse needs of trainee professionals and their employers.

 

 

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