Child Benefit penalties under review

The High Income Child Benefit Charge (HICBC) came into force in January 2013. It applies to taxpayers whose income exceeds £50,000 in a tax year and who are in receipt of child benefit. The charge claws back the financial benefit of receiving child benefit either by reducing or removing the benefit entirely.

HMRC has confirmed that it is reviewing cases where a failure to notify penalty was issued for the tax years 2013-14, 2014-15, and 2015-16, to taxpayers who did not register for HICBC. HMRC will review cases for these years and consider issuing penalty refunds to taxpayers that had a reasonable excuse for not paying the HICBC. Under normal circumstances, HMRC would only entertain a claim for a reasonable excuse directly from a taxpayer. However, in this case, HMRC are proactively reviewing these cases.

This will include families who made a claim for Child Benefit before High Income Child Benefit penalties was introduced, and where one partner’s income subsequently increased to over £50,000 on or after the 2013-14 tax year. This is because the higher earner in a household is the person who pays the charge and may not be the person claiming Child Benefit on behalf of the household.

HMRC is also writing to taxpayers who might be liable to the charge in 2016-17 and 2017-18, to help them meet their tax obligations in time and thus avoid paying a penalty.

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.’

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