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ACCA is warning that the new tax year sees a key development with child benefit and is urging couples to look closely at the small print of what it describes as ‘confusing and complex’ rules regarding payments to high income earners.
For those earning £50,000 plus, the new tax rules mean they will have to pay back some, or potentially all, of their child benefit in extra income tax, while those earning less than £50,000 will receive the full amount.
Chas Roy-Chowdhury, head of tax at ACCA, said: ‘It is confusing how this is calculated and collected – especially for couples who may not share their income details or tax status – as unusual as this sounds, I’ve heard of instances where couples do not share this information openly.
‘Whoever’s earning the higher amount between £50,000 and £60,000, this policy means they’ll have to declare their tax liability with HMRC – they’ll need to self-assess their liability, so will need to register for tax self-assessment.
HMRC states that “If your partner’s income is also over £50,000 but yours is higher, you’re responsible for paying the tax charge. And “partner” means someone you’re not permanently separated from who you’re married to, in a civil partnership with or living with as if you were.’
Further information on the tax charge can be found here
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