Child Benefit warning as thousands of Brits could face major HMRC charges

However, the benefit is not as simple as it seems. If you or your partner earns less than £60,000 per year, you can claim the full amount of Child Benefit. But if one of you earns over £60,000, you have to pay some of the benefit back

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A warning has been issued to Child Benefit claimants as they could potentially face hefty fines if they fall foul of the benefit rules.

Child Benefit is cash paid to parents or other people who are responsible for bringing up a child by HMRC. The money is available to anyone who has "parental responsibility" over a child under the age of 16 - or 20 if they are in full-time education. The cash is the government's way of acknowledging the extra costs involved in raising a child, and it applies to every country in the UK.

As of April 6, Child Benefit payments sit at £26.05 a week - which equates to £1,355 a year - for the eldest or only child and £17.25 a week - or £897 a year - for each additional child. According to the latest data, more than 7.65million households claim Child Benefit.

However, it's not as simple as it seems. If you or your partner earns less than £60,000 per year, you can claim the full amount of Child Benefit. But if one of you earns over £60,000, you have to pay some of the benefit back.

Under the rules, you pay it back at a rate of 1% for every £200 you earn over £60,000 - this is known as the High Income Child Benefit Charge (HICBC). Earn over £80,000 and you'll need to pay back 100% of it - meaning you don't get anything. To pay back the benefit, you currently need to submit a self-assessment tax return.

However, under changes announced in the Spring Statement this year, households will soon be able to pay the charge directly through their tax code.

Once registered with HMRC, parents will be able to choose to have their HICBC collected through their company payroll, meaning they’ll no longer need to file a return to report Child Benefit. The changes will take effect this summer, and HMRC will contact affected families when the new digital service launches.

As these changes don't come in until the summer, households will need to make sure they are not caught out. In a blog post detailing the changes set for the benefit this year, the consumer group Which? warned that if you don't repay your Child Benefit, you could be charged a penalty and interest on what you owe from the day payment was due.

Fines can be up to 30% of what you owe HMRC in Child Benefit payments, and late payment interest on taxes now sits at 8.5%. This is the highest level it has ever been. If you owe several years of payments, what you owe could end up being quite expensive. An investigation from Which? found that some parents were forced to pay back multiple years' worth of payments.

One parent was forced to repay six years' worth of Child Benefit payments, although they did not share how much they owed. Another parent had to repay two and a half years of Child Benefit payments, which were worth £2,700 in tax charges and £4,500 in late filing penalties.

According to HMRC data, the number of families claiming Child Benefit has fallen to the lowest level since 2003. According to the consumer group, this coincides with the introduction of the High-Income Child Benefit Charge. HMRC's most recent estimates cover the 2021/22 tax year, which saw 390,000 individuals pay a total of £450million of HICBC liability.