Around 220,000 people who receive child benefit should register for tax self-assessment by tomorrow to avoid being hit with a fine of up to 100% of the tax due.

If you receive child benefit and get paid more than 50,000 a year, you technically have until midnight tomorrow (5 October) to register for self-assessment if you haven't already.

But while you should register before the deadline – providing you register and pay the tax due by 31 January 2014 – HM Revenue & Customs (HMRC) says any penalty for missing it will be wiped.

Child benefit reforms introduced at the start of the year saw around one million families either lose their child benefit, or get a reduced payout (see Are you a child benefit loser?).

Under the changes, parents who earn more than 50,000 a year either get less or nothing at all, though it is done in a convoluted way as they still can get the full pay out but have to pay some or all of it back via a tax return (see our Benefits Check-Up tool to check if you're getting everything you're entitled to).

HMRC sent letters to around two million eligible taxpayers last month reminding those affected of the looming deadline.

But if you're yet to register, or aren't sure if you need to take any action, read our Q&A below.

Martin Lewis
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How do I know if I need to register for self-assessment?

If you live in a household where at least one adult (not necessarily a biological parent) earns over 50,000 a year and claimed child benefit between 7 January and 5 April this year, you need to register for self-assessment for the 2012-13 tax year by 5 October.

You should have received a letter from HMRC reminding you of the changes and action you need to take.

If you stopped receiving child benefit payments before 7 January 2013 – when the changes were brought in – you don't need to do anything.

I'm affected. How do I register for self-assessment?

To register, either call HMRC on 0300 200 3310, or fill out this online form.

I've registered for self-assessment. What happens next?

Within 5-10 days after completing the self-assessment registration process, HMRC will send you a Unique Taxpayer Reference (UTR) and a 'Notice to File' by post.

The UTR is the main reference code you'll need for as long as you file for self-assessment. Upon receiving your UTR and the Notice to File document, you will be able to complete and send a self-assessment form to HMRC.

You have until 31 January 2014 to send off your completed self-assessment form.

What happens if I miss the self-assessment registration deadline?

HMRC says you could face a penalty fine of up to 100% of the tax due if you miss the self-assessment registration deadline. However, it adds that each case will be considered individually and the penalty will vary depending on the reason for missing the deadline.

Plus, providing you register and pay the tax due by 31 January 2014, any penalty for missing tomorrow's deadline will be wiped.

A HMRC spokesman says: "Every year we see a last moment peak in registrations, and we expect that to happen again this year as people will always inevitably leave things until the last moment.

"However, we are reminding anyone that needs to register that they should do so as soon as possible to ensure they pay the right amount of tax charge due, and avoid a possible penalty."

Why do I need to register for self-assessment?

The new child benefits system, which came into force this year, means that while high earners are still eligible to receive the full amount of child benefit, some or all of it will need to be paid back.

Households where at least one parent earns between 50,000 and 60,000 a year will have to pay pack a proportion of the child benefit they receive.

Families where at least one earner has an income of over 60,000 will have to pay back the full amount of child benefit.

Both of these groups will have to declare this on a self-assessment tax form.

If neither parent earns more than 50,000 a year, you are entitled to the full amount in child benefit and do not need to take any action.

How much child benefit am I entitled to?

Child benefit is paid weekly, and the following amounts are fixed until April 2014:

  • 20.30 (1,056 a year) for the oldest or only child.
  • 13.40 (697) for each additional child.
  • 14.75 (767) per child guardian's allowance.

I earn between 50,000 and 60,000. How can I calculate the reduction?

If at least one parent in a family earns in between 50,000-60,000, they will still get the full child benefit. However, they'll pay extra income tax to reduce the gain.

This will be charged at 1% of the total child benefit per extra 100 they earn over 50,000 a year, and will be based on the salary of the highest earner of the two. See the HMRC website for how to calculate this.

However, if you earn over 50,000 and put money into a private pension plan, or ask your employer to sacrifice a portion of your salary in exchange for childcare vouchers or additional holiday, then the amount you get in child benefit is calculated based on your headline salary after these deductions.

So if for example, your salary is 54,000, but you pay 4,000 or more into your pension each year, you will still receive full child benefit and will not have to repay any of it. High earners may choose to contribute more to their pension or to pay for extra holiday in order to receive the full amount of child benefit.

I earn over 60,000. Should I opt out of receiving child benefit?

It's up to you. If you earn over 60,000 a year, you can choose to either receive the child benefit and pay it back, or to opt out from receiving it altogether.

Opting out means you won't have to fill out any self-assessment forms (unless you have to fill out a self-assessment tax return for other reasons).

However, from a money saving perspective, you could continue receiving child benefits and put that cash into a high interest savings account to accumulate interest over the course of the year before paying HMRC back.

How can I stop receiving child benefits?

You can opt out of child benefits by filling in a form on the HMRC website.

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