Earn over £50,000? Got children? If so, you could be about to enter a whole new world of administrative irritation. A brief from accountants Baker Tilly reminds us about the new limits on child benefit. In families where one partner has more than £50,000 of income, child benefit is now withdrawn on a sliding scale, until, at more than £60,000, none is payable.
You can, if you like, just ask for your payments to be stopped (and if you earn over £60,000 and expect to continue to earn over £60,000, you should). If you don't do that, you have to pay any excess received back through the tax system. That means that if you haven't already registered for self-assessment, you need to do so by 6 October or risk being fined.
To Baker Tilly, this seems a bit nuts. The child benefit change only came in in January, so for those with two children and an income of more than £60,000, the total HM Revenue & Customs can reclaim is £438. If the parent is only earning £51,000, the tax charge would be a mere £43. "Hardly worth the time and effort from HMRC to deal with a self-assessment tax form."
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There is already a system in place whereby HMRC can make adjustments to people's tax codes and reclaim up to £3,000 in unpaid tax from their salaries. Surely, says Baker Tilly, this would make more sense, given the small amounts?
But I wonder if there isn't more to it. While the sums to be collected in this tax year might seem small, they will be quadrupled next year (when the new tax system covers a full tax year). So it makes sense to get people in the system now.
But it is also worth noting that a good number of those earning £50,000 and over should probably already be filling in self-assessment forms. It is likely that they have some kind of non-salaried income (rents, dividend income, bond coupons, interest on savings accounts and so on).
Most people in higher-income brackets have some kind of income beyond their base salary these days. This is a pretty straightforward way to encourage them to come clean, something that the Chartered Institute of Taxation hints at in its own note on the subject, with the suggestion that, once in the self-assessment system, people "will also need to declare all their income, such as investment income, and may be liable to pay further higher rate tax on that".
Look at it like this and it makes more sense. A sledgehammer to crack a nut? Maybe. But while Britain is in the grip of a sharp cyclical recovery, the same cannot be said for our debt levels. The government needs all the tax revenue it can get.
Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).
After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times
Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast - but still writes for Moneyweek monthly.
Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.
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