Families face losing child benefit

universal credit

child benefitsParents who earn more than £50,000 a year will be getting letters from the tax man telling them that they may lose their child tax credit.

More than a million families will be affected by the changes as the government is cutting the benefit, which in the past has been given to everybody, for those with larger incomes.

Who is affected?

If you or your partner earn more than £60,000 a year than your child tax credit will but cut completely, while those of you who earn £50,000 or more will receive a reduced rate.

The cuts mean a family with three children could lose £2,449.20 a year, as child benefit is worth £20.30 a week for the oldest children and £13.40 a week for each other child.

What can be done?

Parents who believe their income will mean they are no longer entitled to the full benefit will have two options, either to elect not to receive the benefit from January or for the benefit to be clawed back when they fill in their self assessment tax returns.

Tax expert Mark Warbuton, of Grant Thornton accountants, recommends that if your income fluctuates around £60,00 from year to year, you should claim the benefit but remember to let HM Revenue & Customs know or else you could face paying significant penalties.