More than 800,000 people could lose out following the Government’s decision to change rules on child benefit.
That’s the warning from Amy Horton, from Dyke Yaxley Chartered Accountants, in Shrewsbury, who says the move will certainly not simplify the tax process – despite claims to the contrary.
“From January next year, an income tax charge will be introduced to claw back child benefit from families with higher incomes.” “The rules on who is entitled to child benefit and the amount of benefit itself will both stay the same.”
Amy said the charge would apply to anyone receiving child benefit who earns over £50,000 in a tax year, and to anyone whose partner was receiving child benefit and whose income was over the £50,000 threshold. If both partners earn over £50,000, the charge will apply only to the partner who earns the highest income.
“And under the new rules, the terms ‘partners’ includes not only married couples, but also civil partners, unmarried couples, and same-sex couples not in a civil partnership, ” said Amy.
She also said that although the new tax would be collected via the PAYE system, as many as 500,000 people may well be forced into completing a self-assessment tax return for the very first time.
“If families don’t want to pay the extra charge, claimants will be able to choose not to receive the child benefit payments, even if they are entitled to them. But if their financial circumstances change, that decision can always be reversed.”
Amy said there were many options available for anyone on a higher income and for couples before the tax charge came into effect.
“But now is the time to decide on what action you will take as time is rapidly running out.”
“It is vital to decide on an effective strategy and make the right decisions now in plenty of time ahead of the January deadline”.
Dyke Yaxley’s Amy Horton