Over 100,000 parents face child benefits tax fine The axe taken to child benefit payments, part of the Coalition's austerity cuts, was controversial - and costly for the families involved. Parents with three children would have lost £2,449 a year. To replace that income, a pay rise of more than £4,000 would be needed, after higher-rate tax. For families with two children, the benefit is worth around £1,700, with the Government paying £20.30 a week for the first child and £13.40 for siblings. HMRC originally wanted affected recipients to register ahead of a deadline for filing paper forms at the end of October 2013. Around 165,000 had failed to declare themselves by that stage; another 60,000 have since come forward. Those remaining parents, many of whom may not even know they are affected, are being urged to register now. They will be fined £100, but the amount they owe will also accrue interest, be it on child benefit or tax due. The money owed for this tax year - the high income child benefit charge - is the benefit paid from January 6 to April 6 last year. A family with two children and one earner on more than £60,000 will have to repay £438. It steadily reduces for those who earn between £50,000 and £60,000. Use the calculator at gov.uk/child-benefittax-calculator. How to file a return - and avoid the pitfalls You first need to register at the Government's Gateway website. An activation code is sent in the post, which could take up to 10 days. The next stage is to complete the self-assessment form at hmrc.gov.uk. It is crucial to avoid websites offering to perform this function for a fee. Opportunists are advertising on Google anything from self-assessment registration to arranging an "EHIC," a card available at no charge from the NHS, which gives you access to free or discounted health care elsewhere in Europe. Only click on official websites for such services. Each year, you should keep essential paperwork in one place. You will need a P60 - sent to you by your employer after the end of the tax year last April that shows your earnings. A P11D form, which shows any taxable benefits, such as a company car or health-care scheme, will also be needed. The tax on these benefits is increasingly paid through your normal work taxes, but any figures on a P11D must be entered on the self-assessment form. You will also need to declare any interest earned from dividends on shares or from bank accounts. Your bank should issue a certificate for the amount. If you earn money on a freelance basis you need to keep accounts of how much the "business" makes as profit. You can offset some of the costs incurred. If you don't have all this information, it is wise to file a provisional return, and even consider making a payment, to avoid some of the fines accruing, as you can make adjustments for up to a year. "I'm afraid penalties apply straight away," says Ruth Owen, HMRC director general for personal tax. They also rack up at an alarming rate. For those already registered for self-assessment, a £100 fine is applied for late filing on February 1. Then at the start of May, £10 is added each day until £900 is reached. There are further fines of at least £300 at six months and 12 months. After 30 days, 5 pc is added on to what you owe, followed by another 5pc after six months, and again at 12 months. Interest is also applied, at a rate of 3.5pc on the amount owed, and on the penalties. Calculations undertaken for the Telegraph by accountants Baker Tilly show that someone owing the typical £438 on child benefit who fails to file a form would face a bill of £1,030.66 after six months. "These are the automatic charges, and do not include any other penalties which may be applied," the company said. For those not registered but who should be, there is also a "fail to notify" penalty, which could be 100pc of what is owed. HMRC said this is applied "subjectively." The other charges mentioned above are applied once you are registered. So if you are not issued with a fine notice on February 1, do not think you have escaped the system. The issue of withdrawing child benefit was highly charged. Further, some people affected did not receive a letter in late 2012 warning them to stop the payments. So will the taxman show any special treatment, or even the smallest amount of leniency? "They won't be treated differently," said HMRC's spokesman. The Telegraph will be closely monitoring the issue. Tell us your experience by emailing money@telegraph.co.uk, or comment on this article at telegraph.co.uk/money. How to reduce your bill - and keep your child benefit There are a few things you can do to reduce what you owe. One that many people fail to take advantage of is the tax breaks on charitable giving. When we donate via Gift Aid, basic rate tax you have paid is claimed back by the charity. You can yourself claim back an additional amount if you are a higher-rate or top-rate taxpayer. This can even include membership of charities, such as the National Trust, RSPB or even the subscription you pay to Which?. Gary Heynes, head of private client tax at Baker Tilly, says that on a £80 donation, higher-rate taxpayers will receive £20 back, while those who paid last year's 50pc income tax, now 45pc, would get £30 back on a donation made that year. He also said you don't necessarily need to have a personal record of the donation, as long as you filled in a Gift Aid form. The charity should have the paperwork. Another popular way to reduce tax bills is to pay more into your pension. Payments into a work pension normally escape tax by being taken before tax is deducted, but if you put money into a personal pension then you can claim back the tax owed. So if you pay £8,000 into a Sipp (self-invested personal pension), your account will be credited with a £2,000 payment from HMRC, giving you £10,000 to invest. But as a higher-rate, 40pc taxpayer, you will be entitled to a further £2,000 rebate from the taxman. If you put this on your tax form (confusingly, you must declare the amount including HMRC's contribution; so £10,000 in this example) you will reduce your tax bill by £2,000, or you could be paid it as a rebate if you owe nothing else. If you have a buy-to-let property you must declare any income from it, but you can reduce the bill by declaring interest paid on the mortgage, letting fees, insurance and other outgoings. Offsetting these other elements, such as pension and donations, could even be enough to reduce your taxable income so that you can keep the child benefit. One other, far more radical way to keep child benefit is to structure your income differently. A popular route for some parts of the workforce, especially within the IT sector, has been to establish yourself as a company and turn your employer into a client. They pay your firm and you pay yourself a small salary from it. The most high-profile examples of people having such as arrangement have been a handful of BBC presenters. It means you will have a far lower tax bill, and although you'll need to employ an expensive accountant, you can keep those child benefit payments if the salary you pay yourself is kept below £50,000. Baker Tilly's Mr Heynes said: "We haven't heard of people doing this to keep child benefit. It's not normally worth doing something that extreme. Lame excuses that HMRC says won't wash HMRC's website has published the 10 worst excuses parents have given for missing the registration deadline: 1 My pet goldfish died (self-employed builder). 2 I had a run-in with a cow (Midlands farmer). 3 After seeing a volcanic eruption on the news, I couldn't concentrate on anything else (London woman). 4 My wife won't give me my mail (self-employed trader). 5 My husband told me the deadline was March 31, and I believed him (Leicester hairdresser). 6 I've been far too busy touring the country with my one-man play (Coventry writer). 7 My bad back means I can't go upstairs. That's where my tax return is (a working taxi driver). 8 I've been cruising round the world in my yacht, and only picking up post when I'm on dry land (man from the South East). 9 Our business doesn't really do anything (Kent financial services firm). 10 I've been too busy submitting my clients' tax returns (London accountant). 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