Social Security Benefits

With incomes falling, it could pay some couples to restart Child Benefit payments. The sooner they act, the better.

The introduction of the 'High Income Child Benefit Charge' (HICBC) in 2013 caused many problems. At the core of what many viewed as a fiasco, was a lack of adequate communication. Some higher rate taxpayers outside the scope of self-assessment assumed that their tax affairs were all dealt with via PAYE codings. HMRC's publicity about the HICBC failed to reach many of its target audience, something that eventually resulted in HMRC refunding over 6,000 'Failure to Notify' penalties for 2013/14, 2014/15 and 2015/16.

In recent years HMRC has been more proactive in warning its ‘customers’ that they may be liable to the HICBC. The latest data shows that in 2018 HMRC issued warnings to 126,000 individuals. Many taxpayers with adjusted net income exceeding £60,000 have chosen to stop payment of Child Benefit rather than suffer a tax charge equal to the benefit. The latest figures from HMRC (sadly only for August 2017) show 516,000 taxpayers having opted out of receiving Child Benefit.

In the era of Covid-19, it is likely that some of those taxpayers who opted out in the past should now restart Child Benefit because their adjusted net income for 2020/21 will be under £60,000. Anyone thrown on to the Coronavirus Job Retention Scheme with its £2,500 maximum monthly payment should certainly check the situation.

The sooner action is taken, the better, as the maximum period for backdating Child Benefit is three months. The deadline for a full 12 months’ payment in the current tax year is thus 5 July 2020.


Summary

This is one of those situations where it can make sense to make a pre-emptive claim. If at the end of the year adjusted income is over £60,000, there is no loss (tax will match benefit), but if income is lower, then there will be a net benefit.

For further Information please visit gov.uk/child-benefit-tax-charge/restart-child-benefit

Anyone who has opted to have their Child Benefit payments stopped, can submit a request to have payments restart. You can do this online using the above link, by contacting the Child Benefit Helpline on 0300 200 3100, or in writing to the Child Benefit Office (address below). Payments will usually start again from the Monday after your request is received.

HM Revenue and Customs - Child Benefit Office
PO Box 1
Newcastle Upon Tyne
NE88 1AA
United Kingdom