New tax year could bring Child Benefit confusion for some, says ACCA
The new tax year (6 April) sees a key development with Child Benefit of which families need to be aware, say Chas Roy-Chowdhury, head of tax at ACCA (the Association of Chartered Certified Accountants).
Chas Roy-Chowdhury says:
‘Confusing and complex rules come into play from 6 April regarding Child Benefit and high income earners.
‘For those earning £50,000 plus, the new tax rules mean they’ll have to pay back some – or indeed all – of their Child Benefit in extra Income Tax.
‘Those earning £50,000 to £60,000 per year will have to pay an undisclosed amount of their benefit back in extra Income Tax.
‘But for those earning less than £50,000 per year, they’ll receive the full amount of Child Benefit without having to pay back to the tax man. It is confusing how this is calculated and collected – especially for couples who may not share their income details or tax status. As unusual as this sounds, I’ve heard of instances where couples do not share this information openly.
‘Whoever’s earning the higher amount between £50,000 and £60,000, this policy means they’ll have to declare their tax liability with HMRC – they’ll need to self-assess their liability, so will need to register for tax self-assessment. HMRC states that “If your partner’s income is also over £50,000 but yours is higher, you’re responsible for paying the tax charge. And ‘Partner’ means someone you’re not permanently separated from who you’re married to, in a civil partnership with or living with as if you were.”
‘We’re advising people to acquaint themselves with the new rules and read the GOV.UK update carefully. Don’t ignore the fact that you may have a tax liability as HMRC may contact you a few years down the line to ask you for the tax.’