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Families could face Child Benefit tax bill in the thousands

1st February 2016 Print

NFU Mutual warns that many higher income families receiving Child Benefits may need to find the extra thousands of pounds needed to pay a lump sum bill from the tax man, if they failed to submit their online tax return before 30th December.

Sean, McCann, Chartered Financial Planner at NFU Mutual explains; “The 2013 changes to the Child Benefit system now mean that families, where one or both parents has an income over £50,000, are subject to a ‘Higher Income Child Benefit Charge’ and must complete a self assessment tax return.

“Although the deadline for submitting online tax returns is the 31st January, parents who submitted theirs before 30th December will benefit from being able to spread the repayment of their charge, otherwise the repayment must be made in full.

“The amount of Child Benefit you will have to repay is calculated on a sliding scale up to 100% for people earning £60,000 or more. Parents in this situation may choose to opt out of receiving Child Benefits in a bid to avoid repayment, however, stay-at-home parents could jeopardise their state pension as a result.

“This is because for each week the stay-at-home parent is entitled to Child Benefit they qualify for a National Insurance credit, which contributes towards their basic state pension entitlement, up until the youngest child is aged 12. Parents must ensure they make a claim before opting out of receiving payments. This will also make it easier to start payments again if their income falls in future years”