£50,000 Limit for Child Benefit
The new £50,000 limit for child benefit payments comes into force on Sunday 6 January 2013, if a member of your household earns in excess of £50,000 this will affect you.
This means that if any member of your household earns more than £50,000 in a tax year your household will lose some or all of your child benefit payments, currently £1,752 per year.
The child benefit will be clawed back at the rate of
1% of the benefit for every £100 that you earn over £50,000. This £50,000 threshold applies to the highest earner in the household, whether they be husband, wife or partner. It will be recovered through the annual Self Assessment Tax Returns which are required to be prepared by anyone who is a higher rate tax payer. Although many higher rate tax payers do not have any other income apart from their salary so in reality many higher rate tax payers do not complete Self Assessment Tax Returns.
It is estimated by HMRC that an extra 500,000 people will be required to complete an annual tax return because of the
changes to child benefit.
It should be noted that the £50,000 limit for child benefit changes includes all forms of income, these include:
- Property income
- Interest receivable
So beware, even if your gross salary is under £50,000 a year you
may still lose some child benefit because of other forms of income. If your total income exceeds £6,000 then all the child benefit will be lost.
Because the Child benefit will still be paid gross and reclaimed as tax, then it is probable that many people will get unexpected tax bills when they complete their 2012-13 Self Assessment Tax Return, which should be filed with HMRC by 31 Jan 2014.
Failure to submit this tax return will of course lead
to the inevitable and potentially very expensive late filing penalties. One solution to this issue would be to join the 165,000 households who have already surrendered their Child Benefit, however this benefit is your right and even at a reduced level it is worth keeping.
PGA Self Assessment have a Personal Tax Return Service that costs just £75 + vat and will ensure that you are compliant with the new rules and do not end up with late filing penalties.
Call us to discuss your requirements on 01666 822256 or