Warning as 1.6million on Child Benefits asked to repay THOUSANDS or face a fine
PARENTS who claim Child Benefits are warned of 'hidden' charges that could affect as many as 1.6 million people.
Some unsuspecting parents have been asked to repay thousands of pounds for benefits they might not even realise they're getting.
This is because they earn over a threshold, which means they're liable to the High Income Child Benefit Charge.
Child benefit is worth £84.60 a month for the first child - or just over £1,000 a year - and £56 a month for an extra child.
But the cash must be paid back if you earn over a certain amount.
And high earners who earn more than £60,000 must pay back Child Benefit in full.
Meanwhile, anyone earning over £50,000 has to pay back a portion of the money in the form of extra Income Tax.
But many parents aren't even aware the charge exists.
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They're now being warned they could face a big bill for not repaying the benefit when the next financial year begins in April.
How much do I have to repay?
How much of your Child Benefit you have to repay depends on how much you earn.
You'll pay back 1% of what you receive for every extra £100 you earn over £50,000 each year.
That means if your salary is £50,100 a year, you'll pay back 1%, and if you earn £51,000 you'll pay back 10% of the cash.
Someone earning £50,100 a year would have to pay back £10 for the £1,099.80 in Child Benefit they were eligible for that year.
These thresholds refer to individual income, not combined household income.
Controversially, that means if both people in a couple earn £49,000 a year, they won't have to repay Child Benefit.
But if one person earns £60,000 and the other doesn't work, they'd have to pay it all back.
Most low-income families earning under £50,000 won't have to pay back the Child Benefit at all.
But fail to meet the repayments and you will face a penalty on top of the charge.
That could see the £10 repayment you owe,
So something that might have been a £10 payment for the year could increase to an eye-watering £110 plus.
HMRC says it checks each year and writes to customers explaining what they need to do to pay the charge and avoid penalties.
How do I avoid paying back Child Benefit?
To avoid the tax charge you should ask HMRC to stop the payments.
It's best to stop before the next financial year begins to save any extra charges, but that means you only have just over a month to cancel.
You'll then only be taxed on any payments received up to the date that they stop.
Of course you won't get any more Child Benefit payments anymore either.
What happens if I don't pay the tax charge?
If you don’t pay tax (and don’t set up an arrangement with HMRC) you’ll face penalties.
You’ll pay a late filing . You’ll have to pay more if it’s later, plus you’ll be charged interest on late payments.
You can to estimate late Self Assessment penalties.
But if you’re facing financial hardship or personal difficulty, you might be able to set up a payment plan to help spread the costs.
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HMRC's Time to Pay is a service you can use to pay a tax bill in instalments, you just have to get in touch tax authority to see if you can agree to an HMRC payment plan.
You will still be charged interest but you won't face any more penalties.
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