Changes to child benefits could help parents avoid HMRC fines

Lydia

Financial Guidance
General Finance

This summer, the government announced changes to a tax charge that affects higher earners. This could help thousands of parents avoid having to fill in a self-assessment tax form.

The high-income child benefit charge is a tax charge that affects people earning more than £50,000 a year and their partners. It means that a large numbers of parents have to repay some or all of their child benefit, and it’s been pretty controversial since it was first introduced in 2013.

About 373,000 people got hit with the charge in 2019-20. Because of this, as of August 2020, more than 620,000 families had opted out of receiving child benefits to avoid being hit by the charges. Frozen tax thresholds and wages rising with inflation have dragged more parents into the charge’s net, creating more hassle and stress for families who are affected.

So, what’s new?

💡 Ministers have said that in the future, those affected by the child benefit charge will not have to register for self-assessment to pay what they owe. Instead,the money will be paid back via your PAYE tax codes,which should tackle the problem of families being fined for not paying the charge simply because they hadn’t realised they owed anything.

In a statement, the government said it wanted to “simplify” the process and would provide details later on how it would enable employed people affected by the child benefit tax charge to pay it through their tax code, without the need to register for self-assessment.

Some experts are speculating that the charge will eventually be in line with inflation, making it much easier for families to claim this benefit. For now, though, once this change comes into play, it’ll take away unneeded bulky HMRC fines, saving families that little bit more.

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