HMRC reduced High Income Child Benefit Tax checks during pandemic – but taxman expected to return


HMRC reduced High Income Child Benefit Tax checks during the pandemic because staff were redeployed on Covid-19 schemes, it has revealed.

Compliance checks fell from a high of 125,594 in 2019/20 to just 45,553 in 2020/21, after they had doubled in the year before the pandemic. That year 96% of those checks resulted in tax being owed.

However, HMRC admits it has only ‘deferred’ these checks, and with more people getting caught in the net as wages increase, more families will start receiving letters.

Those who need to pay the charge must submit a Self-Assessment tax return each tax year, even if they are employed and normally pay their tax through PAYE.

  2017/18 2018/19 2019/20 2020/21
Not registered for self-assessment 39,158 41,257 61,881 22,612
Returned incorrect amount 25,236 22,334 63,713 22,941
Total compliance checks made 64,394 63,591 125,594 45,553

Sean McCann, Chartered Financial Planner at NFU Mutual, said: “HMRC dramatically increased the number of checks they made before the pandemic when over 120,000 families were contacted in a single tax year, but as staff were redeployed to deal with Covid schemes, that figure collapsed.

“Families who didn’t receive reminder letters last year shouldn’t assume the tax isn’t owed. If you have income over £50,000 and receive child benefit or live with a partner who does, you may need to repay it.

“As wages increase, more families are going to get caught by the tax. The £50,000 threshold has remained frozen since the tax was first introduced in 2013. With the self-assessment tax return deadline looming at the end of January it’s worth checking now if you need to pay it.”

Fines for not declaring

Those who fail to notify HMRC that they owe the tax could receive fines of up to 30% on top of what they owe. However, since a penalty review in 2018 changed what constituted a ‘reasonable excuse’ for not declaring the number of fines issued has fallen.

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