Families who receive Child Benefit may have that money clawed back as tax where the higher earner in the family has a total net income of £50,000 or more. The full Child Benefit must be repaid where one of the parents has a total income of £60,000 or more.
It is the responsibility of the higher earner to tell HMRC that they need to complete a tax return in order to self-assess their tax charges. Although HMRC manages claims for Child Benefit, it doesn’t know which claimants have a higher earning partner.
Many parents aren’t aware of the need to pay back their Child Benefit as tax. If your income rises above £50,000, HMRC don’t necessarily prompt you to complete a tax return. Where HMRC discovers there is tax to pay in respect of Child Benefit, it may issue penalties to the affected parents.
HMRC has now decided to refund some parents for the penalties they were charged for failing to tell the tax office they needed to complete a tax return in order to pay the Child Benefit tax charge. To qualify for a refund of those penalties, your family must have started to receive Child Benefit before 7 January 2013. The penalties will be refunded automatically – you don’t have to contact HMRC.
If you need to declare your Child Benefit to HMRC for 2016/17 or a later year, you still need to complete a tax return. If you forgot to mention Child Benefit on your tax return but you did earn over £50,000, you can amend your return or we can do this for you.