Child Benefit changes: what does it mean for Contractors?

Altered in last year’s budget and coming into force on January 7^th of this year, Chancellor of the Exchequer George Osborne instated a significant reduction in the amount of child benefits a family would receive if the highest earner made a salary of £50,000 upwards. From a highest earning of £60,000 or over, the benefits are terminated altogether.

So, statistically, this ruling affects most contractors (send your gratitude-ridden Thank you notes Mr Osborne’s way). 

The Telegraph reported that the child benefit is worth £20.30 per week for the first child and £13.40 per week for each subsequent Brother or Sister. Affected families have lost an average of around £1,300 per year.

But it seems the HMRC are experiencing difficulty rustling up enthusiasm amongst high earners to part with their old entitlements, as 165,000 have reportedly failed to register for the required self-assessment, or cancellation, of the child benefit.

This lack of desire to act by families seems to have provoked the HMRC’s Chief Executive Lin Homer to momentarily disregard her professional etiquette, as she urged parents to “get off their backsides” on Friday.

Understandable as it is to not been seizing the next available opportunity to reduce, or altogether lose, your benefit, a hefty fine for missing the deadline to register if you are a high earner can be levied by the HMRC (this could be up to the total amount of child benefit received between January 7^th and April 5^th this year).

Amongst the disgruntled objections from the affected, Director General of the Institute of Directors, Simon Walker, has adhered that the benefit cuts and consequential imposed fines and taxes “degrades the motivation to work” for now hard-pressed families.

If you are a contractor experiencing cuts to your child benefits, get in touch by email, we’d love to hear from you.