HI Child Benefit charge - System is broken

MatG1979

I have been struggling with this for years now. A few years ago i exceeded the tax threshold for the HICB charge (which is ludicrous in itself as i wouldn't consider myself a 'high earner').To note this was before it changed as well so i would've been fine when it first kicked in. To make matters worse i don't even receive the payment. Ever since then my personal tax allowance has been getting hammered ever year to claw it back. We managed to get the Child Benefit cancelled a few years ago...and I'm still getting collared for self assessments and payments. I thought i had finally escaped it for the upcoming tax year, only to find (by sheer chance) i had a self assessment payment overdue of £645, which had been accruing interest since January. To make this more farcical is that this payment was due because in the 23/24 tax period i received a tax credit from out of nowhere of £680. Having been paying back so much tax over the years gone by i assumed someone had realised an error or something and so I happily accepted. Having come back to bite me they have apparently readjusted that tax year in Jan 25 and found i need to pay most of it back again. I would add at no point have i received any notice of this so had i not happened to look in the HMRC app last weekend, i would never have known. This brings me to the point that this whole system is broken. HMRC are treating anyone getting dragged into this whole process as tax experts or people with accountants. Given that people are struggling to pay their bills as it is, you would think there would be something simpler in place to ensure this is handled correctly. I am not self employed, or a business owner, and i don't have access to an accountant so treating me in the same vein is completely insane. According to HMRC, and their response to me questioning why i was not informed of this out of the blue payment, was 'i should be keeping check on it myself'...not forgetting that i had no other reason to fill out a self assessment other than this child benefit situation. Also as we cancelled it in 2023, i no longer have any reason to check my tax records. I am paid through an employer, and all that tax 'stuff' is sorted out for me. They even expected me to have the 600 quid to hand, so i could just quickly pay it! I cant surely be the only person suffering from this whole process...!? I've paid it off and raised a complaint with HMRC about the whole thing but tbh I'm not expecting much to come of it..

Exodi

I'm not sure there's a question here so I've suggested this to be moved to the praise, vent & warnings board.

NedS

Unfortunately this is correct - it has always been your responsibility to check you are paying the correct amount of tax. It has never been HMRC's responsibility - they are simply a tax collection /enforcement agency there to collect the tax that you owe (although they are normally more than helpful in assisting you if you ask for assistance). If you are unable to manage your own tax affairs, you should employ an accountant to manage it for you, although I would suggest that for most people it is probably cheaper and easier to learn how to do this for yourself.

However, I do agree that more and more people may fall into this category as people's tax situation becomes more complex and they start to fall outside of simple PAYE taxation.

MatG1979

Thanks tbh this was probably more of frustrated vent than anything else, but what i was interested to see how widespread and painful this issue is becoming? The HICB seems to crop up every now and again in public interest then disappears again. I class myself as an ordinary working person, my tax has always been covered through PAYE and I've never had a single tax issue my whole working life until this started. The fact that I'm getting suggestions of hiring an accountant (which would make sense given the issues I've had) should be a massive red flag for this whole thing - how many people can afford to do that just for child benefit? I tried to sort this myself and thought i had done so rather well  - again HMRC credited me the £600 in the first place, and are now taking it back due to 'an adjustment' with literally no explanation or warning. Again being treated as if i have a business account with this sort of money lingering around (as per what i would expect an actual self assessment should be for)   

NedS

I agree that it's a poor way to administer a benefit.

To me it would make more sense if it was moved away from HMRC and into the remit of DWP means-tested benefits, maybe as an increase to the child element of UC.

They had the opportunity to do this when they introduced UC as a replacement for 6 legacy benefits, including tax credits which was also administered by HMRC, so no reason they could not have bundled child benefit into that, but they chose not to, and instead means tested it through higher taxation.

Exodi

NedS said:

I agree that it's a poor way to administer a benefit.

To me it would make more sense if it was moved away from HMRC and into the remit of DWP means-tested benefits, maybe as an increase to the child element of UC.

They had the opportunity to do this when they introduced UC as a replacement for 6 legacy benefits, including tax credits which was also administered by HMRC, so no reason they could not have bundled child benefit into that, but they chose not to, and instead means tested it through higher taxation.

I guess the downside of what you suggest would either be a significant increase to the people entitled to claim UC, and by extension would be inadvertently eligible for various passported benefits (for example, claiming reimbursement for childcare costs through universal credit, social tariffs (e.g. broadband, energy, etc), legal aid, opening a government subsidised help to save account, etc). The system just wasn't designed for those earning up to £80k to be claiming UC. I guess you'd also have to waiver the savings taper, which is wrought with issues (as currently you can claim child benefit and having savings over £16k).

OR of course you're suggesting to significantly reduce the thresholds at the same time (which would be controversial to say the least, and I expect you won't have many people agreeing with you). Using the OP as an example, this solution would be saying "you don't have to worry about paying any tax charges for child benefit any more, as we've taken the child benefit from you. You're welcome."