Lifestyle

Mum stunned to hear she owes £3,000 back in child benefit thanks to obscure rule

A mum was stunned when she learned she and her partner had to pay back £3,000 of child benefit because of a little-known rule.

Lorraine Dyer, from Halesowen, West Mids, has child benefit paid directly into her bank account.

But she and partner Gareth were shocked when they were told by HMRC they owed thousands back to the government due to commission he had received from his job as a recruitment consultant.

A rule is in place whereby individuals who earn more than £50,000 have to pay back a certain amount of their child benefit in income tax.

And earnings that tip them over the threshold can come from money earned as commission, overtime, bonuses or even a company car allowance.


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"Gareth works as a recruitment consultant and didn’t realise that his commission had tipped him over the edge," Lorraine, who runs Mini First Aid classes, told Birmingham Live.

“It’s the fact it came out of the blue that was so annoying, if we had known we would have cancelled immediately!" she said.

"We always follow all the rules and don’t try to cheat at anything. It seems HMRC are getting a nice tidy sum from something that they could have easily adjusted. Many of our friends experienced this too, so it seems we're not a minority!

"We received no notification, we were just told we had a £3,000 debt. Then when we questioned it, they added on an additional fine for delayed payment."

She added: "The tax office said he was supposed to have sent self assessment tax returns but he didn’t think he had to do this because he’s not self employed. He’s never had to do that before.

“It gets set up automatically and then you just forget about it. It worked out to be around three years worth that we owed. It had been coming in for such a long time, around £10 a month that we didn’t really notice it going in.

"They said we could pay it back in installments over a year but that’s quite a short timeframe. It’s money we could have spent on a holiday."

The rule, which was brought in back in 2013 but is not very well known, currently means families have to pay back one per cent for every £100 they earn over the threshold.

And Lorraine is not the first parent to be caught unawares by this rule.

Richard and Rebekha Nicholls, from Grimsby, were told to pay back a hefty £7,400 after encountering the same problem.

In that case, Richard's company car was what tipped them over the limit.

An HMRC spokesperson said customers liable to the High Income Child Benefit Charge can elect to opt out of receiving payments of Child Benefit and still receive the other advantages of claiming it.

This includes protecting their NI contributions record, as well as ensuring their child receives an NI number in the future.

They said: “We use a wide array of channels to reach those who may be liable to pay the High Income Child Benefit Charge.

"This includes putting information about the charge in packs made available to new parents which tell them how to claim child benefit.

"We continue to improve our communications including on social media, GOV.UK and via third parties such as family websites.  

“If anyone wishes to find out more about the charge, especially whether they are liable to pay it, we encourage them to visit   www.gov.uk/child-benefit-tax-charge or call our Child Benefit helpline on 0300 200 3100.”

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