THOUSANDS of parents have just days to check their child benefit entitlement or risk a huge bill.
Families who receive child benefit and earn above a certain amount will need to declare their earnings to HMRC.
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If you are a parent earning over £50,000 then you are liable to pay a high-income benefit charge.
To pay the charge you must register for self-assessment and fill in a tax return by October 5.
If you do not register for self-assessment or do not declare child benefit on your self-assessment tax return, you could face a hefty fine.
As well as having to pay the amount you owe, failing to file a self-assessment tax return could also see you fined up to 30% of what you owe HMRC.
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If you file late, you will also be charged another £100, and if it is over three months late interest will be charged on any outstanding balances.
To work out if your income is over the £50,000 threshold you will need to work out your “adjusted net income”.
Your adjusted net income is your total taxable income before any allowances and this includes interest from savings and dividends.
You can use the child benefit tax calculator on Gov.UK to get an estimate of how much this is.
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Some parents in this earning bracket continue to claim child benefit and pay the charge because it helps to build up national insurance credits.
You need national insurance credits in order to qualify for a state pension.
What is child benefit?
Child benefit is money that is given to families to help cover the cost of childcare.
There are two different rates – parents can claim £21.80 per week for their first child and for any additional children they can claim an extra £14.45 a week.
You qualify for child benefit if you live in the UK and are responsible for a child under 16.
Parents can also claim support if they have a child under 20 in approved education or training.
However, if you or your partner individually earn over £50,000 you have to start paying back some of your child benefit.
What is the high-income child benefit charge?
If your income is between £50,000 and £60,000 the charge is 1% of your child benefit for every £100 between those two figures.
If your income goes over £60,000 all your child benefit is taken away and you have to pay the full amount.
This means that couples can have a joint income of up to £100,000 before any child benefit is deducted.
If your income is over the threshold you can choose to still get payments and pay any tax charged to HMRC at the end of each tax year.
Or you can opt out of getting payments and this means you will not be liable to pay the tax charge.
Charity Turn2Us suggests using the government’s child benefit tax calculator to see how you could be affected by the high-income tax charge.
How do I cancel child benefit?
To avoid having to pay the charge some parents look to cancel child benefits payments completely.
You can do this by either filling out an online form on the government’s website or contacting the Child Benefit Office by phone or post.
The number to call is 0300 200 3100.
The address to send any post to is HM Revenue and Customs – Child Benefit Office, PO Box 1, Newcastle upon Tyne, NE88 1AA, United Kingdom.
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You will need your government gateway user ID and password to hand to fill in the online form.
If you don’t have a user ID you can create one when you fill in the form.
