Child Benefit: Some recipients may need to file tax return this week or face £100 penalty

January 27, 2020
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Self Assessment is a system which is used by HM Revenue and Customs (HMRC) to collect Income Tax. If a person needs to send a Self-Assessment Tax Return, they fill it in after the end of the tax year (April 5) it applies to.

The Self-Assessment Tax Return deadline is midnight at January 31, 2020.

This is for the last tax year, which started on April 6, 2018 and ended on April 5, 2019.

This applies to both online tax returns, as well as to pay the tax a person owes.

Ahead of the deadline, people who are affected by the High Income Child Benefit Tax Charge may wonder whether they need to file a Self-Assessment Tax Return.

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Child Benefit: Person looking at finances

Child Benefit: Some people may need to file a Self Assessment Tax Return (Image: GETTY)

As the deadline looms, Kay Ingram, Chartered Financial Planner and Director of Public Policy at LEBC Group, has explained that some people affected by the charge will need to file this tax return.

“If you continue to receive Child Benefit and one of the adults in the household has adjusted income of more than £50,099 you will need to pay tax on the Child Benefit,” she said.

“This applies, regardless of the marital status of the adults in the household, or their relationship to the child for whom the benefit is payable.

“Once adjusted income exceeds £60,000 it is taxed at 100 percent. Where both adults have adjusted income over £50,000 the adult with the higher income is responsible for paying the tax.

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“The tax is charged at one percent of the Child Benefit for every £100 of adjusted income over the £50,000.”

Ms Ingram went on to suggest that while filling in a Self-Assessment Tax Return may not be how a person wants to spend their time, she said some may be better off doing so – rather than waiving the payment.

“Those who are only marginally over this should resist the temptation to simply waive the Child Benefit,” the Chartered Financial Planner said.

“While this is administratively simpler, it means loss of otherwise tax-free income.

“Child Benefit is currently £20.70 per week and an additional £13.70 per week for each additional child. It will increase by 1.7 percent in April.

Child Benefit: Person looking at finances

Child Benefit payments may be affected for some people due to the High Income Child Benefit Tax Charge (Image: GETTY)

“The Government website includes a calculator so each taxpayer can see how much tax they will pay by continuing to receive Child Benefit.

“Adjusted income is taxable income from earnings or profits, property, and savings and investments.

“Tax-free income such as all income from Individual Savings Accounts, the first £500 of savings interest and the first £2,000 of dividends, first £1,000 from a business or self- employment and any rent from a lodger up to £7,500 under the rent a room allowance, can be disregarded.

“It is also possible to deduct charitable donations made under the gift aid scheme and pension savings made by the taxpayer.”

Should a person need to send a tax return and they miss the deadline for submitting it or paying their bill, they will get a penalty.

If the tax return is up to three months late, the charge will be £100.

Gov.uk states that a person will have to pay more if it’s later, or if they pay their tax bill late.

They will also be charged interest on late payments.

James Foster, Senior Commercial Manager at SJD Accountancy, said: “Whatever sector you’re working in, it’s essential that you submit your self-assessment tax return on time to avoid unnecessary fines.

“This is especially important if you don’t have anything to declare, as you don’t want to end up having completely avoidable costs billed to you.

“Having an accountant will mean that you don’t have to worry about missing submitting your self-assessment return – along with any other important tax issues you may have as your accountant will take care of this on your behalf and remind you of any deadlines.

“We know how hard individuals work in order to earn a living – and having to spend quite large amounts of money on late fees and fines isn’t ideal.”



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