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News - 29 October 2012

Child benefit letters being sent out

Letters to parents, who will be affected by the changes to the Child benefit scheme announced in the budget and due to come into effect in 7 January 2013, will be arriving on their doorstep very soon.

Letters will be sent to people who earn more than £50,000 who live at an address where child benefit is received to explain how their family is likely to be affected.

Child benefit currently stands at £20.30 a week for the first child and £13.40 for each child after that.

Under the new approach, families where one parent earns between £50,000 and £60,000 will have their benefit reduced on a sliding scale equivalent to 1% of the benefit received for every £100 of income on those earning between £50,000 and £60,000.

Anomalies will occur, for example in a household where both parents earn £49,000 it will not be affected, but where one parent earns in excess of £60,000 and the other parent stays at home they will lose all the benefits currently received.

It is thought that thousands of parents will have to complete a self-assessment tax form

Stuart Coleman, Manager of the Tax Department of ABDS comments:
“We have already had calls from people confused by the change, or looking to avoid losing benefit by legal means, for example, making additional pension contributions, or income splitting.”

The system is administered by HM Revenue and Customs (HMRC) which pays out to nearly 7.9 million families, with 13.7 million children

The charge will be calculated based on the adjusted net income for the household for the whole of the year in which benefit was recieved - so the charge from January 2013 is based on the income for 2012/13 - so it cannot be reliably determined until after the end of the tax year.

In a recent poll conducted by Populus 82% of the public supported the government’s plans to reduce child benefit from high earners, with only 13% opposing it.

If you need any help and advice with your Tax returns and declarations, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help in all your financial and business planning.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail:

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