Thousands of parents hit with child benefit tax charges could have them wiped due to HMRC u-turn

The UK's tax body has announced it will review cases where a "failure to notify" penalty was issued between 2013 to 2016 for those who did not register for the High Income Child Benefit Charge.

It comes after The Sun revealed that HRMC was issuing letters to hundreds of thousands of parents telling them that they unknowingly owed the tax man cash.

Some parents report on Twitter that they're being stung with bills for thousands, while last month we covered the story of one family who owe £6,000.

The issue relates to a change in child benefit rules in 2013, which saw anyone earning more than £50,000 having to pay a charge to continue receiving the benefit.

HMRC is now automatically refunding customers where was a "reasonable" excuse for not paying the charge.

Can I claim child benefit?

You get £20.70 a week for your eldest or only child, and then £13.70 a week per child for any additional children.

You may have to pay a tax charge if you (or your partner’s individual income is over £50,000. This is known as the ‘High Income Child Benefit Charge’.


This includes some parents who applied for the benefit before the rule change were unaware of the new fee, while others were been hit after one partner's income has subsequently increased above the £50,000 limit.

An HMRC spokesperson said: "HMRC is listening to customers and stakeholders, and reviewing our approach to HICBC to ensure we are treating everyone fairly.

"Customers do not need to ask for a penalty refund or contact HMRC. We will issue the refunds, where due, over the next six months."

Becky O’Connor, at Royal London said: "The Revenue did not communicate the charge properly at the time it was introduced in 2013.

"As a result, many parents found they not only had to pay back thousands of pounds in tax through self-assessment returns they didn’t know they had to produce, they were also whacked with late payment fines.”

"These were paid by parents who were unknowingly dragged into a liability for a charge they were never properly told about.”
The Child Benefit Tax Charge increases by 1 per cent for every £100 earned over £50,000.

Once you earn £60,000, the charge effectively wipes out the gain you'd get by receiving child benefit.

Some parents continue to claim child benefit and to pay the charge because it helps them to build up national insurance credits, which you need to qualify for the state pension.

To pay this charge, parents have to file self-assessment tax returns for the previous tax year every January.

In similar news, tens of thousands of parents are missing out on thousands of pounds worth of state pension benefits due to child benefit complications.

Parents should also be warned that families with children may be stopped from getting a mortgage.

How to file a tax return

Self-assessment is a system HMRC uses to collect income tax.

It's typically used by the self-employed, but people in receipt of child benefit who earn more than £50,000 a year also need to complete it.

You don't need to return your self-assessment form until the tax year has ended.

So, if you owe tax for the 2017/18 tax year, and you've not registered for self-assesment before, you need to do so by October 5, 2018.

You've then got until October 31 to file your return if you want to do so by paper.

If you'd rather submit your return online, you've got until January 31, 2019.

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