High Salary Child Benefit Deadline Now
Published / Last Updated on 03/10/2013
High Salary Child Benefit Deadline Now.
The deadline for higher earners for registering for self-assessment to ensure your child benefit continues is the 5th October (i.e. Saturday).
Given that the next HMRC work day is Monday, you have this weekend only to register for self-assessment.
If you have not registered by Monday, your child benefit could be in jeopardy with tax fines and penalties.
What are the basic child benefit rules?
If just one parent in your family unit earns £50,000 per year or more you are affected. Much has been written about two parents earning £40,000 per year each (combined £80,000) and still being able to claim child benefit but if you one parent earns £50,000+ things change. The system is unfair but we must deal with what the law is currently.
If you earn more than £50,000 per year, you will pay a tax charge the child benefit your family unit receives.
Think of it like a “benefit in kind” and tax payable like having a company car where you tax code will be reduced.
This is why you must register for self-assessment of your income tax.
If you earn £60,000 per year or more you are not entitled to child benefit and you should still register/stop claiming child benefit.
From 7 January 2013 (i.e. 9 months ago) – you are liable to tax adjustment on child benefit if you earn £50,000 or more.
Getting your Salary Below £50,000 or £60,000
A simple tactic would be to consider making pension contributions to reduce your ‘net relevant earnings’.
Get Child Benefit Back - Pensions
Example: You earn £55,000. Your child benefit tax liability is proportionately reduced.
By making a gross, private, pension contribution of £6,000 (net payment £5,000).
You adjusted gross pay is now £49,000. You are now entitled to full child benefit without a tax charge.
Contact us to discuss retaining child benefit by making pension contributions.