A major administrative error by HM Revenue and Customs (HMRC) has resulted in hundreds of thousands of UK parents receiving incorrect Child Benefit payments, potentially leaving them with unexpected tax bills.
What Went Wrong?
The blunder occurred when HMRC failed to properly apply the High Income Child Benefit Charge (HICBC) to eligible families. This charge applies when one parent earns over £50,000 annually, requiring them to pay back a portion of their Child Benefit through the tax system.
Who's Affected?
Experts estimate that between 150,000 to 250,000 families may have been undercharged due to this error. The mistake primarily affects:
- Families where one parent earns between £50,000-£60,000
- Those who failed to register for self-assessment
- Parents who didn't complete tax returns properly
What Happens Next?
HMRC has begun contacting affected families, offering them the choice to either:
- Pay the outstanding amount in full
- Set up a payment plan
- Have the amount deducted from future Child Benefit payments
The tax authority claims most families will owe less than £1,000, but some could face bills of up to £2,500.
How to Check If You're Affected
Parents should:
- Review their tax records for the past 4 years
- Check for correspondence from HMRC
- Contact HMRC directly if unsure
Financial experts warn that ignoring the issue could lead to penalties, urging parents to address any discrepancies immediately.
