Partner Article

Parents could face penalties as 31 January tax deadline looms

With just over three weeks until the deadline for filing online self-assessment tax returns, parents need to urgently look at their finances as for the first time those earning more than £50,000 a year and collect Child Benefit will have to complete a self-assessment return.

HMRC estimates that around 1.2 million families will be affected, and it’s likely that a number of these will be caught out as they’re simply unaware of this new rule.

In the March 2012 Budget, the Government announced a new tax charge on couples with children where one partner earns more than £50,000, with the benefit being ‘clawed back’ through their self-assessment return if the parent had not elected to stop the payments. Those earning over £60,000 will effectively not receive any benefit, because the tax will be the same as their entitlement.

Parents affected by this new rule and who received child benefit between January and 5 April 2013, will have to pay some benefit back in the form of tax. Parents required to file an online self-assessment tax return will need to register with HMRC which will involve being sent an activation code by post.

Bearing in mind that there is usually a delay between registration via the Government Gateway and receipt of an access code, a large number of anticipated first time self-assessment filers could mean the system is likely to be swamped and the delay much greater. Therefore, taxpayers need to act now to avoid delays in sending back their return.

Sending tax returns back late can be costly. In addition to a potential penalty for failure to notify, failure to file a tax return on time will incur an initial penalty of £100 and further penalties will be due for delays over three months (costing up to £10 a day) and even longer delays could result in a percentage of the amount of tax outstanding being charged.

Parents need to check now whether they are affected by these changes as using the excuse that you weren’t aware of these new rules is unlikely to wash with HMRC.

This was posted in Bdaily's Members' News section by Baker Tilly .