01 November 2018

"Major concession from HMRC over high income child benefit tax charge" - Royal London

3 min read

 
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Becky O'Connor

Personal Finance Specialist

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HMRC has today announced that it will consider refunding taxpayers who have faced a ‘failure to notify’ tax penalty in connection with the High Income Child Benefit Tax charge.

The move has been welcomed by mutual insurer Royal London who have been campaigning for reform to the system which is poorly understood by many taxpayers.

Since 2013, couples receiving child benefit where one partner earns more than £50,000 per year face a tax bill which can offset some or all of their child benefit.   Where one partner earns more than £60,000 a year, the tax charge wipes out the whole value of the child benefit received.   However, the system is not well understood and tens of thousands of couples, especially those who do not routinely complete annual tax returns, have failed to declare to HMRC that they need to pay this tax charge.  In response, HMRC has issued large numbers of ‘failure to notify’ tax penalties against such families, as well as expecting them to pay back the under-paid tax.

Following protests, HMRC has today announced that it will consider refunding the penalty charges in cases where the taxpayer “had a reasonable excuse for not meeting their tax obligation”. More information on the announcement can be found here. HMRC say that refunds will be issued over the next six months and that there will be no need for individuals to apply.

Welcoming the announcement, Becky O’Connor, Personal Finance Specialist at Royal London said:

“The Revenue did not communicate the charge properly at the time it was introduced in 2013. As a result, many parents found they not only had to pay back thousands of pounds in tax through self-assessment returns they didn’t know they had to produce, they were also whacked with late payment fines.

“It’s right and proper that HMRC has changed its mind and will be refunding unfair penalty fines. These were paid by parents who were unknowingly dragged into a liability for a charge they were never properly told about.”

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For further information please contact:

Becky O’Connor, Personal Finance Specialist

About Royal London:

Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £117 billion, 8.8 million policies in force and 3,745 employees. Figures quoted are as at 30 June.

At Royal London, we’re proud to champion the value of impartial advice. We believe it plays a crucial role in connecting people with the products that are right for them – and is key to delivering better outcomes and experiences for our customers. At the same time, it helps to build trust in our products and services.

Royal London works alongside advisers not in competition with them. That’s why we’ve made some key commitments to the intermediary market. You’ll find more detail on our commitment to advisers at http://adviser.royallondon.com/campaigns/our-commitments/