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Updated: 4 Oct 2021

Last chance to register for self-assessment - what parents claiming child benefit need to know

Higher earners who fail to pay tax on child benefit payments could receive a penalty

The deadline to register to pay tax by self-assessment is on 5 October - and that includes new parents who receive child benefit payments.

There were 61,881 customers who failed to register for self-assessment to file their 2019-20 tax return, despite owing tax for child benefit payments; a further 63,713 taxpayers paid the incorrect amount of tax.

You only need to register if you've never paid tax by self-assessment before - in addition to those receiving child benefit payments, you may need to pay tax by self-assessment if you've received income from sources such as self-employed payments, selling a valuable asset or rental income.

While HMRC often gets in touch with people to let them know they'll need to submit a tax return, this doesn't always happen and the onus is on you to make sure you've declared all of your taxable income.

Here, Which? explains how to register for self-assessment, and why claiming child benefit could land you with an unexpected tax charge.

Why can claiming child benefit result in a tax bill?

Child benefit refers to the flat-rate monthly government payments for those who are responsible for children.

However, households where one or both parents or partners earn more than £50,000 a year are required to pay some or all of this benefit payment back via a self-assessment tax return. This is known as the high-income child benefit charge.

The tax you pay equates to 1% for every £100 you earn over £50,000; if you earn £60,000 or more you'll have to repay all of the child benefit payments you've received through your tax bill.

If you or your partner's income does exceed £50,000, the person who receives the child benefit payments must register for self-assessment. You'll have to do this even if you're employed and usually pay tax via PAYE.

If you don't pay the tax you owe from child benefit payments, you could be charged up to 30% of the tax you owe.

It's possible to opt-out of receiving child benefit payments, but still receive National Insurance credits for any parents that are not working due to caring for children. This means you won't have any gaps in your National Insurance history, which may affect your state pension entitlement further down the line.

Who needs to register for self-assessment?

More than 12.1 million people were expected to submit a self-assessment tax return for the 2019-20 tax year. These include:

  • self-employed workers
  • child benefit claimants
  • business partners, or directors of limited companies
  • ministers of religion
  • those who owe capital gains tax from selling an asset
  • anyone who's received a P800 form to say they haven't paid enough tax.

You can find a more comprehensive list for those who pay tax by self-assessment in our guide.

How to register

It's easy to register for self-assessment - but the process can take a while.

You can register for self-assessment online at gov.uk. You'll need to select whether you're self-employed, not self-employed, or a partner or partnership.

Once you fill out your details, there are several numbers and codes you'll need to watch out for. Firstly, you'll be posted your 10-digit Unique Taxpayer Reference (UTR) number - you'll need to use this for all future self-assessment returns, so keep it safe. It will take up to 10 working days to arrive if you're in the UK, or up to 21 working days if you're abroad.

Once you've received your UTR number, you can use this to set up your online account, and sign up for self-assessment online. You'll then be posted an activation code within seven working days (21 abroad), which you'll need to complete the sign-in process, and submit your tax return.

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What if you miss the deadline?

Failing to register for self-assessment by 5 October may not result in a penalty from HMRC - but you may be charged if it means you don't submit your tax return and pay the tax you owe on time.

If you're just a day late to submit your tax return, you could be faced with a £100 fine, and your tax bill will have 2.6% interest added to it every day that it's late.

Submit your tax return with Which?

When you come to submitting your tax return - which is due by 31 January 2022 - the Which? tax calculator can help you tot up your tax bill, and suggests expenses and allowances that you might have forgotten.

You can declare income from a range of sources, and even use the tool to submit your return directly to HMRC once you're satisfied that everything's been included.