165,000 face child benefit fines for failing to apply for Tax Return

Lin Homer: The HMRC chief is urging parents to register  for tax self-assessment


Tens of thousands of families face hefty  fines on top of losing their child benefits after they missed a deadline to  apply for a tax return.

Around 165,000 households that have an earner  on a salary of at least £50,000 and have received child benefit this year failed  to register for self assessment.

They risk fines of up to 100 per cent of  their child benefit payments.

Cuts introduced in January mean that up to a  million families are no longer entitled to all or part of the payments, worth  around £1,700 a year for two children.

Households with someone earning more than £50,000 lose a proportion of the benefit and from £60,000 it has to be forfeited  entirely.

The complicated way in which the change was  introduced required parents to either opt out in advance from receiving the  benefit by January 6 this year, or register with the taxman for a self  assessment return by October 5.

A HM Revenue & Customs spokesman said: ‘More than 29,000 people registered for self assessment over the weekend, taking  the total registrations to 160,000.

‘This means that fewer than 165,000 people  still need to take action and on past experience we expect more people to  register in the coming days.

‘Although we are past the deadline, people  should still register for self assessment to minimise any penalties they may  face.’

To avoid any fines – set at between 10 per  cent and 100 per cent of the money owed back to the taxman – parents should  register for self assessment as soon as possible.

HMRC has said that as long as families  register and file their return by January 31 2014 – the deadline for online  returns rather than paper returns – any penalty for missing the deadline will be  disregarded.

Child benefit is worth £20.30 per week for  the first child and £13.40 per week for each subsequent brother or  sister.

Cuts introduced in January mean that up to a million families are no longer entitled to all or part of the payments, worth around £1,700 a year for two childrenCuts introduced in January mean that up to a million  families are no longer entitled to all or part of the payments, worth around £1,700 a year for two children


HMRC chief executive Lin Homer said on Friday  that twice as many families had opted out of receiving the payment than had been  expected, and insisted the changes were going ‘better than expected’.

Miss Homer told Radio 4’s Today programme: ‘We have been very proactive. We have written to 800,000 people.’

She said that higher-rate taxpaying parents  should ‘get off their backsides’ and register for self-assessment tax  returns.

But the Centre for Social  Justice  warned the cuts risked ‘pouring further fuel on the fire’ of family  breakdown.

The system for recovering the money has  proved especially controversial because a family with a household income of £99,000 can keep all their benefit while one with a single earner on £60,000  would lose all theirs.

The withdrawal of child benefit means a  single earner paid between £50,000 and £60,000 in a family with four children is  hit with a ‘marginal tax rate’ of 73 per cent, according to experts.

This top rate of tax is worked out by  treating the loss of child benefit as though it was a tax. Affected families  have lost an average of £1,300 per year.

Simon Walker, director  general of the  Institute of Directors, said that high marginal tax rates ‘degrade the  motivation to work’ for many.

‘This is a huge disincentive as it is for  beneficiaries on the lowest wages – some of them can be paying 70 per cent, 75  per cent,’ he said.


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