If you or your life partner receive Child Benefit and either of you has taxable income in excess of £50,000, whichever of you has the higher income is obliged to declare the Child Benefit on your tax return and pay some or all of it back to HMRC by way of a High Income Child Benefit Charge (HICBC). It was a controversial change for all sorts of reasons, but most people who knew that they would be required to repay Child Benefit in full simply stopped claiming it when the rules changed. The first tax year affected is 2012/13.
HMRC have recently been courting controversy (again) by writing to people who they think might be liable to pay the HICBC but who haven’t declared it on their tax returns. The problem is that the letter is both poorly targeted and badly drafted. For example, we’ve seen reports of it being sent to people whose income is too low to trigger the HICBC at all – which is unforgivable; and to people whose partner has (correctly) paid the HICBC – which is understandable since HMRC don’t necessarily know who your life partner is and if they did they wouldn’t be allowed to tell you if he or she had paid the HICBC. The letter is stamped (in red) “You need to act now!” (despite the fact that in many cases you don’t need to act at all); and bears no contact details, so you can’t even send it back with a polite (or any other) note or call them.
In a few cases the letter has indeed reminded people who ought to have declared and paid the HICBC that they have forgotten to do so. In most cases it’s a needless act of high-handed bullying. If you get one and you are in the slightest bit concerned, please send it to your normal tax compliance contact here at BKL and we’ll sort it out.
