On the 2013 tax return, all taxpayers need to show whether they or their partner/spouse received child benefit up to 5 April 2013. For those families who did, there are then further questions, including one relating to the income of your partner/spouse. I’ll therefore be asking all my clients with children the questions to check whether they will need to pay the ‘higher income’ child benefit charge.
I am adding information from today’s Budget (from the Budget Press Releases rather than the Daily Mail) most likely to be relevant to my clients. I am also updating details of the information I’ll need for your 2013 tax return. Please see Budget News and 2013 Tax Returns tabs above. Anyone wanting particular advice on action to take before 5 April 2012, do contact me – but any changes meaning that urgent action is advisable, then I’ll be in touch with individual clients affected.
If you are expecting to pay tax in January but have not received a statement, the tax is still due to reach HMRC by January 31st. I am able to see statements online, so please ask me what you need to pay if you are unsure.
The method of payment I recommend is the online system BillPay, using debit card (you can use credit card, with certain charges added). If you select *Pay Income Tax Online* on the right, this will take you to BillPay. You need your 10-digit tax reference (UTR) and payment card. Payments via BillPay count as received by HMRC the moment you finish the transaction, but it takes a few days for a confirmation to be sent from Santander, or to show on the tax offices’ computer system.
If your bank or building society offers the ‘Faster Payment Service’ (FPS), HMRC can now accept payments made this way. Under FPS, payments up to a certain limit will reach their destination by the end of the next banking day at the latest. Once afternoon banking has finished on 26th January, the only quick way to make certain payment reaches HMRC in time is BillPay. You can ask your bank to set up a CHAPS same-day payment but not all banks necessarily offer this and there is usually a fee.
HMRC does not now take any payment by phone.
I suggest that clients avoid paying by cheque if possible. HMRC do not count cheque payments as received until the cheque has been presented and funds have cleared. Any cheque payment should therefore be sent special delivery (not recorded) to arrive by 25th January at the latest, and proof of posting kept in case of delays. If you want to pay by cheque over the Post Office counter, you will need a statement from HMRC with a payslip.
Anyone finding they are unable to pay all their tax on time should ring HMRC once the return has been submitted but before 31 January, to request to spread payment. There are details to the right if you click on ‘Problems paying…’ HMRC will often allow payment over a few months, but do charge interest, so it is worth considering whether borrowing from a bank or another source would be less expensive.
It was proposed last year that Child Benefit be cut for higher-rate taxpayers from 2013. This puts households with one higher earner at a disadvantage compared to a family with two people paying basic-rate tax. This is in the news again at present, and the Chancellor has said that he will set out in the next few months the full policy.
The current amounts of child benefit are £20.30 a week for the eldest child and £13.40 a week for each subsequent child, and benefit lasts until each child reaches 16, sometimes longer if they are still at school.
Until there is further news on this, any families with a higher-rate earner need to be prepared for the possibility of losing child benefit in 2013. Once full details are available, I shall look at whether there are any legitimate and practical ways for families who might be just into the higher-rate tax bracket to bring themselves back within the threshold to receive child benefit.
HMRC have now clarified the treatment of payments resulting from successful claims for missold payment protection (PPI). Refunds themselves are not taxable. Any interest added (typically 8%) is taxable, and needs to appear on the tax return. I also suggest that where any substantial amount of non-taxable income is received, clients consider making a voluntary disclosure in the additional information section of the tax return.
Anyone receiving a payment in respect of a PPI claim, please keep the paperwork you receive as this will form part of your tax records.