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Hit with a high income child benefit charge penalty between 2013-16? You may get a refund

HMRC is considering refunding some parents and guardians who were fined for not registering for the high income child benefit charge.

The department has said it will review cases in the 2013/14, 2014/15 and 2015/16 tax years and will offer refunds to taxpayers who it finds had a reasonable excuse for not registering to pay the high income child benefit charge (HICBC).

Alongside this, HM Revenue & Customs (HMRC) is writing to taxpayers who might be liable to pay the HICBC for 2016/17 and 2017/18 to explain the rule and help them avoid having to pay a penalty.

What is the high income child benefit charge?

The charge is a cost levied on people who get child benefit but also have a relatively high salary.

You may have to pay the HICBC if you have an individual income over £50,000 and either:

  • You or your partner get child benefit.

  • Someone else gets child benefit for a child living with you and they contribute at least an equal amount towards the child's upkeep.

The charge is collected through self-assessment and the pay as you earn (PAYE) system, so if you have to pay the charge you have to complete a tax return.

If you earn between £50,000 and £60,000, the charge will be less than the child benefit you receive, so you'll still be in pocket even if you have to pay the charge.

But if you earn over £60,000 you'll repay all the money. There is still a good reason to claim child benefit though, as it can help to protect your state pension and will make sure your child receives a national insurance number.

See full info on how the charge works on the website. You can use HMRC's child benefit tax calculator to work out if you have to pay.

What does HMRC classify as a 'reasonable excuse'?

A 'reasonable excuse' is something that stopped someone from meeting a tax obligation which they took appropriate care to meet – though exactly what constitutes one is assessed on a case-by-case basis.

Normally taxpayers have to explain why they have a reasonable excuse if they want to get cash back, but in this situation HMRC is proactively reviewing cases.

Those that may have reasonable excuses include those who made a claim for child benefit before the HICBC was introduced back in 2013, and where one partner's income subsequently increased to over £50,000 in or after the 2013/14 tax year.

This is because the higher earner in a household who pays the charge may not be the same person claiming child benefit on behalf of the household.

HMRC says it will offer refunds, if due, within the next six months.

What does HMRC say?

A spokesperson said: "HMRC is listening to customers and stakeholders, and reviewing our approach to HICBC to ensure we are treating everyone fairly.

"Customers do not need to ask for a penalty refund or contact HMRC. We will issue the refunds, where due, over the next six months."

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