Important info: How Monday’s child benefit changes will affect you
As of next Monday, January 7 2013, Child Benefit is to be reduced or stopped entirely for around 1 million UK families. If the changes are going to affect you, don’t assume that the money will simply stop. Instead, the benefit will still be paid into your bank account and you are responsible for paying it back to the taxman.
If you are no longer eligible you can either join the self-assessment tax scheme and fill in a yearly form declaring what you owe, or inform HMRC (HM Revenue & Customs) you no longer want to receive child benefit.
Those who do not pay the child benefit back, regardless of whether it is deliberate or you simply forget, may be liable for fines, so it’s really important to understand the system and act accordingly – which is where Babyexpert comes in.
Who is no longer eligible?
As part of the government’s new austerity measures, child benefit will only be fully paid to those earning less than £50,000 annually. If you or your partner has an income over £50,000 you will lose some or all of your benefit. If the income is more than £60,000 you lose all the child benefit, between £50,000 and £60,000 you lose part of it, on a sliding scale.
If you and your partner have a joint income over £50,000 but both earn under this amount, then you are still eligible.
What counts as income?
As well as money earned through your employment, income can include money earned on savings, income earned from renting property and any additional pay from a second job.
What action do I need to take?
If you or your partner’s individual income is £50,000 or less:
There are no changes to your eligibility. You should continue to receive your child benefit and take no action.
If you or your partner’s individual income is over £50,000 and under £60,000:
You will lose some of your child benefit, HMRC may have contacted you with suggested action. If not you will need to register with the Inland Revenue for Self Assessment for the year 2012/2013. Currently there are around 300,000 affected families who HMRC have been unable to contact.
If you or your partner’s individual income is £60,000 or more:
You will lose all of your child benefit and can take one of two courses of action:
Declare you wish to stop your child benefit payments by filling in a form on the HMRC website (http://www.hmrc.gov.uk/childbenefitcharge/stopchbpayments.htm) or by phoning HMRC on 0845 302 1444. You need to do this before Monday 7 January in order to avoid having to repay tax.
Continue to receive the payments, put them in a high-interest account and earn a little interest on the money, before you pay it back in tax to the Inland Revenue. If you are doing this you’ll need to register for Self Assessment if you’re not already doing so. If you are not confident you can save the money before paying it back then stopping the payments may be a better option for you.
What if my income falls in the future?
If you choose to stop the payments then your circumstances change and you become eligible again, you can restart them at any time. You should also let the HMRC know of any further children you have, so there’s a record of all potentially eligible children.
For more information on the child benefit changes, visit HMRC’s dedicated information page.