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Daily Mail
22-04-2025
- Business
- Daily Mail
EXCLUSIVE Penalties for failing to declare child benefit on tax return plummet as Government eyes changes
The number of child benefit penalties paid out plummeted by 99 per cent last year, according to new figures shared with This Is Money. Child benefit is available to all families, but the Government starts to claw it back from households where the highest earner has an income above £60,000, after Jeremy Hunt raised the threshold from £50,000 in his last Budget. Child benefit is then withdrawn completely once the highest earner makes over £80,000. Higher earners who do not opt out of payments need to pay a tax charge at the end of the tax year and declare it on their self-assessment tax return or face a penalty. Changes to the system mean that penalties collapsed by 99 per cent between 2023 and 2024, according to a Freedom of Information (FOI) request by wealth manager Quilter. In the 2023/24 tax year, 75 penalties for 'Failure to Notify' were issued, down from 7,007 the year before. The total value of the penalties fell from £4.5million to £45,443. With just 46 penalties issued so far in 2024/25, Quilter suggests that last year's fall was not a one-off. Holly Tomlinson, financial planner at Quilter, says: 'The collapse in these penalties is no accident — it reflects the pressure that has rightly built up over years about how unfair the system was. 'Huge media attention highlighted the absurdity of a single parent losing all their child benefit while a couple each earning just under the threshold could keep the lot. 'The Government has finally accepted this doesn't pass the fairness test and is now using carrot rather than stick to help people keep to the rules.' HMRC itself noted in its FOI response that it had focused efforts on raising awareness of the high income child benefit charge (HICBC). Since its introduction a decade ago, the HICBC has come under fire for placing an extra burden on working parents, particularly single parents. A household with two parents each earning £59,000 - a total of £118,000 - will receive child benefit in full, while a household with a sole parent earning £60,000 would see some or all of the benefit withdrawn. Hunt had pledged to significantly reform the charge and consult to move to a system based on a household, rather than individual income by 2026. However, the Government quietly shelved the plans and will no longer proceed with the HICBC reforms. Instead, it has pledged to reduce the administrative burden for families by allowing those affected to repay the charge via PAYE from this summer, rather than completing a tax return. Tomlinson adds: 'In the meantime, families still need to tread carefully. 'If you opt out of receiving child benefit to avoid the charge, make sure the parent who is not working or earning less still gets their National Insurance credits, which count towards the state pension. 'And for those hovering near the income threshold, salary sacrifice into a pension can be a wise financial planning tactic — it reduces your adjusted net income and can bring you back below the charge entirely. 'While Labour look set to let the clear inequalities remain baked into the system at least they are making it easier for people to pay back any additional child benefit they are not eligible for.'
The Guardian
06-02-2025
- Business
- The Guardian
What does the Bank of England interest rate cut mean for mortgages and savings?
The Bank of England has cut interest rates from 4.75% to 4.5% – the lowest level since June 2023. For the majority of borrowers, the answer is no: most people with mortgages are on a fixed-rate deal which means their monthly repayments will stay the same. The cut will translate into lower borrowing costs for homeowners with a base rate tracker mortgage – their rate will fall in line with the Bank's cut. Borrowers on their lender's standard variable rate, or a mortgage linked to it, will have to wait and see. Although it is likely that lenders will reduce their SVRs, they are not obliged to do so and could choose to keep the rate as it is or pass on only some of the cut. The price of fixed-rate mortgages is linked to the outlook for interest rates. Lenders have recently been reducing mortgage rates in anticipation of several rate cuts this year. On Thursday Yorkshire building society cut interest rates by up to 0.31%, with the biggest reductions for borrowers with a 40% deposit. Rates on its 90% mortgages were cut by up to 0.17%. After the cuts, a 75% two-year fixed-rate mortgage for remortgagors will cost 4.39%. Holly Tomlinson, a financial planner at Quilter, says: 'We may see some lenders introduce more competitive fixed-rate deals in the coming weeks but typically most new deals have already priced in today's cut.' Today's decision was expected, but the fact that two economists voted for a steeper, half a percentage point, cut might make the markets believe rates will come down further than they had anticipated. Mortgage rates could fall if that's the case. The returns on savings are generally not explicitly tied to the Bank of England base rate, but Thursday's reduction is likely to be passed on to many savers who have easy-access accounts and others who do not have accounts with fixed interest rates. Many will have already had their returns cut as a result of November's base rate reduction. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion Interest rates on new fixed-rate accounts have already been falling – like fixed-rate mortgages they reflect expectations of where the base rate will be in future. The average rate you can get on a one-year fixed-rate deal, according to Moneyfacts, is 4.2% – below the base rate. However, some banks – particularly the newer names – are keen to attract business so there are some reasonable deals available if you shop around. You can earn 4.67% on a one-year fixed rate bond via the savings platform Raisin, for example. 'Savers will see easy access savings rates edging lower, so should check out the best buys and switch to a better rate if their bank is offering a sub standard deal,' says Andrew Hagger, the founder of 'If you're thinking of putting some cash away for a year or two in a fixed rate bond or Isa, now would be a sensible time to lock in at current levels while you still can.'
