THOUSANDS of parents need to act fast to avoid a £100 fine and extra tax charges.
Families where a mum or dad is earning over £50,000 must tell HMRC about the child benefit they get and pay a tax charge on it.
1
To do this you need to file a tax return and the extended deadline is midnight tomorrow (February 28).
The usual deadline for self-assessment is 31 January but the tax man has given extra time to file with no penalty.
Around 1.5million tax returns are still outstanding, HMRC said, though not all of these are parents as you have to complete if you’re self-employed too.
Around 1.6million are set to be affected by the tax charge this year – around one in five families,
After Monday late filings will incur a £100 fine with lengthy delays also accruing interest later on.
That’s on top of paying the high income child benefit charge (HICB) as well.
Most read in Money
Child benefit is worth £84.60 a month for the first child – or just over £1,000 a year – and £56 a month for an extra child.
The HCBC means if either parent earns over £50,000 then they have to pay a tax charge on the benefit.
The tax charge is paid at a rate of 1% of the benefit for every £100 earned over this amount.
If either parent earns £60,000 or more the full amount must be repaid.
Someone earning £55,000 and claiming for one child would have received £1,115.65 in the previous tax year, but would have to pay £557 to cover the HICBC, according to HMRC’s child benefit calculator.
But many parents are not aware of the charge which came in from 2013.
The Sun has previously spoken to parents who were hit with surprise bills of thousands of pounds.
If you fail to file a self-assessment tax return you could be fined up to 30% of what you owe by HMRC.
A late filing penalty of £100 also applies and if it’s more than three months late interest
If it’s longer than that interest starts to be charged on outstanding balances.
“Reasonable excuse”
Some parents continue to claim child benefit and to pay the charge because it helps them to build up national insurance credits, which you need to qualify for the state pension.
If you fail to let HMRC know and don’t pay the tax charge, they can fine you – on top of what you owe.
The value of the fine can be up to 30% of the amount, unless you have a “reasonable excuse”.
A reasonable excuse is not outlined by HMRC or the defined by the law but you must have a good reason for not meeting your tax obligation and you’ll need to prove this.
More than 1,000 penalties were handed out in the 2019/20 tax year and nearly 5,000 the year before that.
If you are fined and think you shouldn’t have been you can appeal.
Of course the best way to avoid this is by filing on time.
To file a tax return for 2020/21 go to gov.uk if you have registered before, or register for self-assessment online if you haven’t.
If you’re registering for the first time then you may not be set up in time to file by the extended deadline – you usually have to register by the October before.
We pay for your stories!
Do you have a story for The Sun Online Money team?
