News

This week HM Revenue & Customs is sending letters to one million households about changes to child benefit payments.

 

The letters will be accompanied by a flow chart explaining what action people can take.

 

Currently, anyone with a child under 16 or aged 16-19 if they are in approved education or training, can claim child benefit (though only one parent or guardian can claim). Parents and guardians receive £20.30 a week for the first child and £13.40 for all subsequent children.

 

As part of its deficit reduction plan, the government has decided to means test child benefit to cut down on the number of people receiving it. 

Anyone receiving child benefit who earns more than £50,000 a year will lose a proportion of the benefit on a sliding scale - 1 per cent for every £100 earned over this threshold. Those earning more than £60,000 lose all of their benefit.

 

However, the changes will produce anomalies; parents earning £49,000 each will keep all of their child benefit but a couple, in which one person earns £60,000 while the other stays at home, will lose all of their benefit.

 

Following the letter from HMRC, parents will have to decide whether to stop getting child benefit and avoid a new charge or keep getting child benefit after this date and declare the payments for income tax purposes.

People earning between £50,000 and £60,000 are likely to be better off receiving some child benefit so may not want to cancel it entirely. As a result, officials predict that up to 500,000 parents may have to complete self-assessment tax returns.

 

Self-Assessments

 

Are you confused about how the changes to child benefit will affect you? Perhaps you would like help completing a self-assessment to find out if you’d be better off receiving child benefit?

 

Call Foremans LLP on 01244 625 500 to find out how we can help you.