Tax trap warning for all separated parents claiming child benefit – are you at risk of a surprise bill?

SEPARATED parents claiming child benefit are being advised to check they are not at risk of a hefty bill.

The Low Incomes Tax Reform Group (LITRG) is urging couples whose circumstances may have changed to check their original claim.

Parents who have separated since making their child benefit claim could find themselves liable for the high income child benefit charge (HICBC).

This follows a recent first-tier tribunal decision that the parent was liable for the charge despite the fact that the benefit was paid to their former partner.

This is because when a claim is made for child benefit it is made by an individual and not the couple, meaning the HICBC will land on the parent who filed the claim.

If the claimant's adjusted net income exceeds £50,000 they could become liable for HICBC and be completely unaware.

It is also possible that any new partner of the original claimant could also become liable if their income exceeds the £50,000 threshold and they are the higher earner.

As some time may have passed it is possible that separated parents are unsure of who the claimant is and this is why the LITRG is urging parents to check.

Tom Henderson, LITRG's technical officer, said: "When making a child benefit claim, it might feel like it doesn’t matter which person fills in the form – but it does.

"The claimant is the person responsible for keeping the claim up to date and is the person liable to repay the benefit if it is overpaid."

Some separated couples may decide they want the person who made the original claim to continue doing so, while others may look to seek a new arrangement.

While it is not possible to retrospectively change the name of the person claiming child benefit to avoid the charge, it is possible to end the claim for child benefit and for the former partner to make a new claim.

A HMRC spokesperson said: ";Only one person can get child benefit for a child.

"Customers should update their Child Benefit claim if their circumstances change, such as their child moving away from home.

“Anyone with income over £50,000 who claims Child Benefit, or whose partner does, must pay the High Income Child Benefit Charge (HICBC)."

Laura Suter, head of personal finance at AJ Bell commented: "This is another example of how the child benefit system has become fiendishly complicated over the years, catching parents out.

"The end result is that we have a bizarre system when lots of people who are entitled to it don’t claim it, while lots of other people claim the support without realising they are not fully entitled to it."

What is child benefit and who is eligible?

Child benefit is an allowance paid to parents to help with childcare costs.

There are two different rates of child benefit and your payments are usually made every four weeks.

Parents can claim £24 a week for their first or only child, which equates to £1,248 a year.

And for any additional children, they can claim an extra £15.90 a week per child, meaning they will get £826.80 a year.

You usually qualify for child benefit if you live in the UK and are responsible for a child under 16.

Foster parents can also claim child benefit, as long as the council is not paying anything towards their accommodation or maintenance.

Legal guardians or parents adopting a child can also apply for the benefit, as long as the child is living with them.

If you are unsure about your eligibility, you can contact the Child Benefit Office.

A dad of two was shocked when he received a bill to pay back £3,000 of child benefit.

And another dad had to borrow 20k against his home to pay the tax bill he received.