A MARRIED dad has described his shock after being stung with a £3,000 child benefit bill.
Alex Martin, 42, of Bradford, had to pay back the money to HMRC after missing to report earning over a certain amount.
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The High-Income Child Benefit charge (HICBC) is paid by anyone whose yearly salary is over £50,000.
Once you reach £60,000, you have to pay back all the child benefit you’ve received.
But it’s your responsibility to tell the government if you need to pay the charge.
If you don’t, you will have to pay for any outstanding charges and can be fined on top as well.
Since 2013, when the HICBC was first introduced, HMRC has issued 186,043 penalties relating to child benefit.
Alex, who works in sales, was not aware of the HICBC after his wife Donna set up child benefit accounts for their sons Theo, now seven, and Ethan, now 12.
Donna works as an accounts executive for car leasing company Zenith but earns under the £50,000 threshold.
In 2018, Alex received a letter from HMRC saying he had to pay back £3,000 after breaching the £50,000 threshold.
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At one point he was earning over £60,000, meaning he should have been paying back all of the child benefit.
The letter said he had to pay back £1,500 immediately and then the remaining £1,500 before April 2019.
Luckily, the fine for making the payments late was waived as he said he would make the initial £1,500 payment immediately.
But the £3,000 bill still left him angry and frustrated.
“I was in the lucky position to be able to afford it, but it is one of those cases where you get yourself into a grey zone then something comes out of the left field,” he said.
“When you start looking at things now where things are more expensive, would I be able to afford it now? No chance.”
He added: “I was completely oblivious about the threshold.
“My wife Donna set up the account and I didn’t read the terms and conditions.
“Because I’m the higher earner it’s me that got stung with it.”
Alex still receives child benefit as his salary over the last two years has not breached the £60,000 mark.
Any further high income child benefit charges he has to pay are spread across the year and taken out of his Pay as you Earn monthly pay packet.
But he still says receiving the letter in 2018 was a “shocker”.
“As a parent, I was thinking, is my house at risk? Are there going to be any wranglings around it?
“I was thinking could I go to jail for tax evasion.”
An HMRC spokesperson said: “The vast majority of customers meet their obligations and comply with the High-Income Child Benefit Charge (HICBC), by either paying the charge or opting out of receiving Child Benefit payments.
“We take a supportive approach to dealing with customers who owe HICBC, working with them to find the best possible solution based on their financial circumstances.”
What is the high income child benefit charge?
The High Income Child Benefit charge (HICBC) was introduced in January 2013.
It’s a tax charge that’s applied to anyone with an income over £50,000.
But the charge is tapered meaning it increases gradually between £50,000 and £60,000.
If your income is between £50,000 and £60,000 the tax charge is 1% of your child benefit for every £100 between the two figures.
So if you earn £51,000 you will be deducted 10%, and if you earn £55,000 you will have 50% taken from you.
Once you earn over £60,000 the charge is equal to the total amount of child benefit. That means you have to pay the whole lot back.
It’s worth noting that the charge is based on your “adjusted net income”.
This is your taxable income after any reliefs you might claim, including pension contributions and donations made to charity.
How do you pay the charge?
If you or your partner, or both of you, are earning over £50,000, the one getting the most has to fill in a self-assessment tax return.
You have to register for self-assessment and send in a tax return every year.
If you are not sure you are earning enough to breach the £50,000 figure it’s worth registering just in case.
If you don’t, you could be slapped with a fine of up to 30% of what you owe.
You can always contact HMRC self-assessment on 0300 200 3310 if you have any questions about the charge too.
If you are in a position where you can’t pay the charge, you can approach HMRC about setting up a payment plan, called Time to Pay.
HMRC said nine out of 10 people who go on to a Time to Pay arrangement complete the plan successfully.
