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HMRC flags deadline for child benefit opt-out

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HMRC has reminded people with an income over £60,000, whose family continues to receive child benefit, that they should opt out of the benefit before 28 March if they wish to avoid registering for self-assessment and repaying the benefit for 2013/14. Only the person entitled to receive child benefit, or an authorised agent, can stop the payments.

Many people had been assuming the deadline will be 5 April, the Chartered Institute of Taxation said. ‘On examination, this does seem to be the correct statutory deadline. SSAA 1992 s 13A (3) says that “an election has effect in relation to payments made for weeks beginning after the election is made”.’

The CIOT added: ‘It seems that the first payment of child benefit for dates after 5 April will be made on Thursday 28 March, because there would normally be a payment on Monday 1 April for 1 to 7 April (which includes part of 2013/14) but due to Easter the payments will be made early. We have asked HMRC to confirm that our understanding is correct.’

More than 365,000 people have opted out since the high income child benefit charge was introduced on 7 January, HMRC said.

‘People who continued to receive child benefit after January need to register for self-assessment by 5 October 2013 to repay the benefit received between January and April 2013, but opting out now means they will not need to fill in a tax return in future years.’

For people with income of more than £60,000, the tax charge is 100% of the amount of child benefit.

For income between £50,000 and £60,000, the charge is gradually increased to 100% of the child benefit, and HMRC points out that people with income in this range ‘may wish to keep getting child benefit payments as the tax charge will be less than the child benefit received’.

HMRC added: ‘The decision to stay in or opt out of receiving child benefit payments is not final, and families are free to change their minds.

‘Anyone earning over £50,000 who has received child benefit since 7 January 2013 will need to register for self-assessment and complete a tax return for that period, regardless of whether they are now opting out.’

Guidance is provided on the HMRC website.