Martin Lewis shared with his 3.2 million X followers that HM Revenue and Customs (HMRC) has introduced a new scheme that could benefit numerous individuals. He highlighted that higher earners might no longer need to complete a self-assessment if they receive Child Benefit.
MoneySavingExpert, through one of its experts, explained the significance of this new rule, stating that those earning over £60,000 annually and receiving Child Benefit can now settle the high-income tax charge through their tax code. This development is expected to relieve tens of thousands from the burden of filing self-assessment tax returns solely for this purpose.
The repayment of the High Income Child Benefit Charge increases gradually with income levels, culminating in full repayment once earnings reach £80,000 per year. Previously, individuals had to navigate the self-assessment route to settle this charge, even if they were part of the PAYE system. However, following Government initiatives announced during the Autumn Budget, a simplified process has been rolled out to streamline payments for employees.
MoneySavingExpert emphasized that individuals eligible for the new service must be employed and not required to file self-assessment returns for other reasons. However, this option is not applicable to those who need to file self-assessment returns due to self-employment or income from savings or investments exceeding £10,000 annually.
Eligible individuals can now choose to have the charge collected via PAYE alongside regular income tax payments by opting in through an online form on Gov.uk. For those obligated to pay the charge for the first time, HMRC plans to reach out to over 100,000 individuals to prompt them to utilize the online service.
Moreover, the team at MoneySavingExpert advised that if the charge was the sole reason for filing tax returns previously, individuals can switch to the new service by contacting HMRC. Once opted in, HMRC will adjust the tax code, deducting the charge from the individual’s salary as additional income tax.
Lastly, even if a household’s combined income exceeds £80,000, it may still be beneficial to claim Child Benefit to ensure National Insurance credits for State Pension entitlement. This move is particularly crucial for maintaining State Pension eligibility, especially for partners not meeting the earnings threshold for automatic National Insurance credit receipt.
