The high income child benefit charge (HICBC) was introduced in January 2013 to claw back child benefit where the highest earner in the family has total net income of £50,000 or more.
The full amount of the benefit is clawed back if one of the parents has income of £60,000 or more.
If this applies to your family you must tell HMRC that you need a tax return in order to self assess the HICBC. Although HMRC manages claims for child benefit, it does not know who the higher earning partners of those claimants are.
Many parents are not aware of the need to pay the HICBC. If your income rises above £50,000, HMRC does not prompt you to pay it. Some parents were issued with penalties for failing to notify HMRC of the need to pay HICBC and one taxpayer challenged his penalty and won.
HMRC has now decided to refund some parents for the penalties they were charged for failing to notify their liability to pay the HICBC for the tax years 2013-14 to 2015-16. To qualify for a refund your family must have started to receive child benefit before 7 January 2013. The penalty will be refunded automatically; you don’t have to contact HMRC.
If you need to pay the HICBC for 2016-17 or a later year you still need to inform HMRC of this liability.
You can amend your self assessment tax return online for 2016-17 and 2017-18 to pay the charge, or we can do this for you.
Would you like help and advice on this or any other issue?
Contact us straight away by telephoning 01932 564098 or email us using our ‘Contact Us’ page.
This note was published from our Winter 2018 Tax Briefing dated December 2018
Please be aware that the information above may have changed in subsequent months.
This note is written for the general interest of our clients and is not a substitute for consulting the relevant legislation or for taking professional advice.