Thursday, 3 January 2013

300,000 in dark on Child Benefit cuts

The first thing to say is that the 300,000 who have had warning letters are still going to be paid their child benefit when the cuts kick in next week.

It's just that they may have to pay it back later, and fill in a tax return so it can be taken back through the tax system.

Here's the situation...

If one of you in the home earns £50,000 or more the tax office will start clawing back any child benefit being claimed. And if you earn over £60,000 they will take it all back.

Revenue and Customs estimate that 1.1m households will be affected.

But they've only written to 800,000 warning them, so 300,000 may not have heard, though the Revenue says they should have seen adverts.

If you know you're earning so much you'll never be able to keep your Child Benefit, you can simply opt out and save yourself the trouble of doing extra paperwork in future.

170,000 have done that already. You need to opt out by Sunday night to be sure that you've made a clean break and won't have to enter the benefit in a Self Assessment tax return.

If you're not sure - you can just carry on receiving Child Benefit but the high earner in the household will need to fill in a tax return, declaring the money.

Then it'll be clawed back during the following year, in most cases as part of the monthly tax deduction from wages.

There's plenty of time to fill in the form but there is a deadline. For this tax year, it has to be in by the end of January 2014 if you do it online.

You could be fined if the form doesn't arrive.

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