Families who claim child benefits could be caught out in HMRC’s investigations

HMRC have increased the number of investigations into families who claim child benefits. Introduced in 2013, the High Income Child Benefit Charge, requires higher earners, of more than £50,000, to pay back a percentage of their child support payments. For those who earn over £60,000, the entire amount must be repaid. This is based on the highest earner in the family.

The benefit pays a weekly rate of £21.05 for the eldest child and £13.95 for any additional children. There is an option to opt out of receiving child benefits however, this means forfeiting National Insurance credits that count towards state pensions. This particularly affects women who take time off work for childcare.

The threshold of £50,000 has not changed since 2013 however, with wages increasing, some families may be unaware that they need to make repayments if they are over the threshold. Families have been caught out if their wages have increased or if they have moved in with a new partner who earns over the threshold.

In 2018, HMRC was required to refund almost £2m as penalties were cancelled due to HMRC failing to properly advertise the requirements of the system. Since then, HMRC have sent out letters alerting taxpayers that they may be liable to make a repayment. In 2019/20, HMRC was repaid nearly £19m in fines after investigating nearly 126,000 families.

For those who do receive more than they are entitled to, they must notify HMRC and submit a tax return before the relevant deadline.