Child Benefit rule leaves family facing £7,400 tax bill due to high income tax charge | Personal Finance

A family has revealed they’re facing a whopping £7,400 bill from HM Revenue and Customs (HMRC), following changes to Child Benefit rules. The rule was brought in in 2013, and means individuals who earn more than £50,000 have to pay back a certain amount of their Child Benefit in Income Tax.

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This is currently at one percent for every £100 they earn over the threshold.

It’s known as the High Income Child Benefit Tax Charge (HICBC) and it means that once an individual’s adjusted income exceeds £60,000, the payment is taxed at 100 percent.

Richard and Rebekha Nicholls, from North East Lincolnshire, were left stunned when they discovered how much they would need to repay due to this rule, Grimsby Live reports.

While Richard’s salary is under the limit, his company car took him over the threshold – due to it being a benefit in-kind.

Unaware of how they were thus affected by the HICBC rule, the family have been told they now need to pay the bill within 16 months – or they would need to go to court.

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Child Benefit: Couple affected by High Income Child Benefit Tax Charge in pictures

Child Benefit: The family have been affected by the High Income Child Benefit Tax Charge (Image: JON CORKEN • GRIMSBY LIVE • GETTY)

The family first started claiming Child Benefit in 2012, following the birth of their first child, Enya, now seven.

At the time, Rebekha stopped working, while Richard worked as a mechanic earning a “much lower” salary than he does now.

Fast forward to 2015, and Richard got a new job – vastly increasing his salary. However, this still meant he wasn’t earning more than £50,000.

However, Richard was given a company car at his new job, which was counted as an in-kind benefit and included in his income by HMRC.

Now parents of three, the family have continued to claim Child Benefit as they are entitled to do.

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Families affected by the rule are paid the full amount but must make arrangements to pay back the part they are not entitled to – or opt out altogether.

While the couple understand why they received the bill, they’re unhappy about the time it has taken to come to light – leading the amount to build up.

Richard said: “This all started in October when the tax office said that we should be paying the High Income Tax Benefit Charge, and asked us to fill out a self-assessment to figure out how much that we owe them.

“Then at the end of January, we received a letter saying that we owed £2,500. But the following day we got another letter saying that this was wrong and it was in fact £7,400 we owed, and we are still yet to get a final bill figure, so it could be much more.

“This is all because I got a higher paying job three years after we started claiming Child Benefit, and the company car I was given put me over the income threshold because it is counted as an in-kind benefit.

“The thing that gets me is that, why are we only finding out about this now? The HMRC know what my wages are and send me a tax code every year, so why could they not tell us sooner that we had to be paying this charge, because then we wouldn’t be in the position that we are in now.”

Child Benefit: Couple in pictures

Child Benefit: The couple first claimed Child Benefit in 2012, following the birth of their first child (Image: JON CORKEN • GRIMSBY LIVE)


Child Benefit rates: what you should know

The couple say that when they contacted HMRC about the bill, they were told “it was not a bank” and that they could not pay the bill off over the course of several years.

They also say they were told if it was not paid in 16 months, they would have to go to court.

While they say it was suggested they take out a bank loan or ask a family member to lend them the money, the family explain that this is something they are not able to do.

Richard said: “Apparently, this charge only applies to the individual, not the household, so it feels like to me, they are punishing the working man.

“If Rebekha and I were earning £40,000 each, we would have more money between us and not have to pay this charge, but because I am over a certain threshold we do, it does not seem right.”

Rebekha said: “We just don’t know how we are going to be able to pay this. As a family we have gone through quite a lot over the past 12 years, and we have other debts to pay as well on top of this.


Child Benefit: Weekly Child Benefit rates

Child Benefit rates depend on who the allowance is for (Image: GETTY)

“I think that we will have no choice but to try and settle this in court, it is the only way that we can see us getting a payment plan that we can afford.

“Speaking to our friends, we have found out that we are not the only family who have been given a bill like this, and I just want to warn people to make sure that they do not fall into the same trap that we did.”

An HMRC spokesperson said that customers liable to pay the High Income Child Benefit Charge can opt out of receiving payments of Child Benefit, and still receive the other advantages of the payment – such as protecting their NI record and ensuring their child receives an NI number when they reach the age of 16.

The HMRC spokesperson said: “We use a wide array of channels to reach those who may be liable to pay the High Income Child Benefit Charge.

“This includes putting information about the charge in packs made available to new parents which tell them how to claim child benefit. We continue to improve our communications including on social media, GOV.UK and via third parties such as family websites.

“If anyone wishes to find out more about the charge, especially whether they are liable to pay it, we encourage them to visit or call our Child Benefit helpline on 0300 200 3100.”