Have you missed the child benefit deadline, what’s the penalty?
HMRC has revealed that an estimated 165,000 people have failed to register for self-assessment regarding collection via tax of their child benefit. Are you one of them, will you get a penalty?
Who needs to register?
New rules implemented in January this year meant that child benefit was withdrawn entirely if the highest earning parent earns more than £60,000 per year. The new laws ruled that the child benefit is reduced gradually for families where the highest earner has taxable income of between £50,000 and £60,000. Taxable income is made up of earnings from employment, dividends and interest received. Therefore, families where at least one parent has a taxable income of more than £50,000 technically you would have needed to have signed up for self-assessment by 5 October 2013.
What’s the penalty? The media have been reporting parents face a possible fine of “hundreds of pounds” for not registering by the deadline. But this isn’t actually true. There are no special penalty rules for the high income child benefit charge, so failure to register for self-assessment by 5 October 2013 does not, on its own, lead to a tax penalty.
Your will receive a penalty, which could be up to 100% of the tax due, if you:
- fail to file a tax return and pay any tax due by 31 January 2014; or
- make an error on your tax return which understates your tax liability.
Contrary to what the papers say, there’s no special penalty for not registering by 5 October provided you file your return and pay any tax due by 31 January 2014.