120,000 middle-income parents facing penalties

As many as 120,000 parents of middle-income families are set to be hit by fines of £100 from HM Revenue and Customs (HMRC) for failing to repay their child benefit.
 
Parents that fail to register for Self-Assessment and complete an online form to repay the child benefit received in the 2012/13 tax year by 31st January 2014 will be hit with an automatic £100 penalty.
 
Additional penalties could be applied to those who fail to act, reaching as much as £1,600 for those who file more than 12 months late.
 
The introduction of the "high income child benefit tax charge" is resulting in an additional 500,000 parents having to fill out a Self-Assessment tax form for the very first time; a process originally designed for the self-employed and those with complex tax affairs.
 
Taxpayers filling out a Self-Assessment form for the first time are required to register online with HMRC and request a secure password that can only be delivered by post; a process which can take up to 10 working days.
 
Subsequently, there are fears that families who leave it right to the last minute will be automatically penalised, leaving thousands annoyed and disheartened about having to pay back benefit.
 
Jo Nockels, training and communications manager, TaxAssist Accountants, said: "It is your responsibility to check what your obligations are with regards to the High Income Child Benefit Charge.
 
"HMRC have endeavoured to write to everyone affected, but I’m sure people will have slipped through the net – particularly, if they say, became a parent or their earnings tipped over £50,000 part-way through the 2012/13 tax year.
 
"So if you haven’t received a letter from HMRC, please don’t take this as confirmation that you aren’t affected as there is too much at stake.
 
"If you are later found to have been caught by the new rules, you may incur late Self-Assessment registration penalties and late tax return penalties; not to mention the claw back of the Child Benefit itself."
 
Around 461,000 families have already opted out of receiving child benefit. But parents should still ensure they review their State Benefit affairs.
 
"If you have decided to opt out of receiving the benefit, the former recipient must review their affairs to ensure they still maintain their National Insurance record. Otherwise, they could risk forfeiting their entitlement to State Benefits such as the State Pension," added Nockels.

Date published 3 Jan 2014 | Last updated 3 Jan 2014