Parents being forced to pay back their Child Benefit income under HMRC’s new tax regime have been urged to seek ‘crucial’ advice.


The alert has come from family tax expert Anita Stewart who believes countless Midland families are still unaware they must now pay back Child Benefit as a tax charge if one parent earns more than £50,000.


The new rules, through which the government hope to save £1.5bn a year, came into effect on 7 January as part of a number of sweeping HMRC tax measures.


The benefit changes will see more than one million parents having to declare their Child Benefit income by 5 April, whilst others who simply fail to register online by 5 October could face hefty fines.


Ms Stewart, a partner at Midland-based DHJH Chartered Accountants, said parents should ‘think smart’ to reduce their tax bill by looking at the various options available.


She said: “For the first time ever Child Benefit is being means tested and it will pile more pressure onto the region’s household incomes.


“In a nutshell, child benefit income has been slashed within families where one parent has an income of £50,000 with those earning over £60,000 faced with the reality of it being entirely withdrawn.


“But there is widespread confusion as payments have not been altered automatically by HMRC. Instead, the government has asked people earning more than £50,000 to register for self-assessment and pay back the money they owe - unless they opted out before 7 January.


“The calculation is based on the income of the highest earner in the household where for every £100 earned between £50,000 and £60,000, HMRC will claw one per cent of the Child Benefit back irrespective of whether they are the natural parent.


“For those who haven’t opted out of Child Benefit there are choices available and I’ve been informing many parents in recent weeks that they simply have to think smart.


“For example, if their employer offers a salary sacrifice scheme they should make full use of it. Schemes like this can be used to replace taxable earnings with non-taxable benefits such as childcare vouchers.


“Another method is for people to bring their taxable income to below £50,000 –by investing a percentage of their salary into a private or workplace pension scheme. This means that although take-home pay will be reduced, some can still be eligible for child benefit and at the same time contribute to their retirement income.


“Since late last year we haven’t just been advising parents who are employed by companies. We’ve also been speaking directly to business owners on their options.


“Many have been interested to note that if they are running a business together and jointly earning less than £100,000, they can change their income so they individually earn under £50,000 - a small but significant move which will have a positive impact on the child benefit available.


“These are sweeping changes which have left many confused and worried. But the region’s working parents still have time to register for self assessment and organise their affairs. It’s crucial they set the wheels in motion in the coming weeks.”


It is the taxpayer’s responsibility to register for self assessment by 5 October 2013 and complete a tax return by the deadline. HMRC will not automatically bring you into the self assessment system and there are penalties for late registration.


Ms Stewart is offering parents a no obligation discussion on their tax affairs in a bid to assist the region’s families. Appointments can be set up by telephoning 01299 403503 or via email through This email address is being protected from spambots. You need JavaScript enabled to view it.  


Search archive


With our newsletter, you automatically receive our latest news per e-mail and get access to the archive including advanced search options!

» Sign up for the newsletter
» Login