A recent tax tribunal has ruled against HMRC who were seeking to raise tax assessments for the High Income Child Benefit Charge (HICBC) for earlier years that had not been reported to HMRC.

What is the High Income Child Benefit Charge?

HICBC is a special tax charge that applies where one member of a couple in receipt of child benefit receives income in excess of £50,000 a year. The charge is 1% of the child benefit received for every £100 of income in excess of £50,000 such that where income exceeds £60,000 the child benefit is fully taxed.

The problem is that many taxpayers whose income is taxed under PAYE do not receive a self-assessment tax return and may not be aware of the tax charge.

Why was there a tribunal for HICBC?

The taxpayer in this particular case fell into that category but reported and paid the tax when prompted by HMRC. He was then assessed to tax on the child benefit for the three previous years but the court found that HMRC did not have the power to issue those assessments.

Do you currently receive child benefit, or have you opted not to as a result of the HICBC? It might be worth reconsidering your claim in the wake of COVID-19, as many incomes have been impacted by furlough and loss of business. You may find that you are now eligible for the benefit as you no longer fall above the threshold.

 

If you’d like to discuss your individual circumstances with a professional tax advisor and get some impartial advice, please do get in touch.