Parents hit with '£60,000' tax warning from HMRC

HM Revenue & Customs has issued a warning to millions of parents who may face a substantial tax demand after exceeding the £60,000 earnings threshold. The alert highlights the activation of the High Income Child Benefit Charge (HICBC), which requires some or all of Child Benefit to be repaid. This comes amid rising salaries, increasing the risk that parents who have not previously encountered this rule might now face an unexpected financial burden. The warning was shared on social media by HMRC, urging parents who recently received a pay rise to review their eligibility for the HICBC. It stated, “Attention parents! Recently had a pay rise? If you're now earning over £60k and you get Child Benefit you may need to pay some of it back.” The message underscores the growing number of households affected by the charge, particularly as more workers see their incomes cross the critical threshold. Under current rules, the HICBC applies when either partner in a household earns an adjusted net income above £60,000 while receiving Child Benefit. The charge increases gradually as income climbs past this level, with families required to repay the full amount once earnings reach £80,000. Importantly, the charge is based on the income of the higher earner, regardless of which parent receives the benefit. This means that even if one parent is the primary recipient of Child Benefit, the other’s income determines whether the charge applies. Previously, many parents faced the inconvenience of registering for Self Assessment simply because of the Child Benefit charge. However, HMRC has introduced a new service allowing eligible individuals to settle the tax directly through PAYE. By signing up, taxpayers can have their tax code adjusted so the charge is collected automatically via their salary or pension. This change aims to simplify the process and reduce administrative burdens on affected households. Eligibility for the PAYE service includes several conditions. First, parents should not already need to complete a Self Assessment for other reasons, such as being self-employed. Second, they must be paying the charge for the current or previous tax year. Third, they must register by January 31 following the end of the relevant tax year. For example, those liable for the charge during the 2025-26 tax year can apply for the PAYE option if they register by January 31, 2027. Those missing the deadline or already required to file a tax return for other reasons must continue using Self Assessment. Parents who have previously used Self Assessment solely due to the Child Benefit charge may also qualify to transition to PAYE. To enroll, taxpayers must provide details such as their adjusted net income, information about their partner’s receipt of Child Benefit, and relevant National Insurance data. This ensures accurate processing and timely resolution of the charge. HMRC has also encouraged parents to use its mobile app, which offers tools to check Child Benefit status, view tax codes, estimate liabilities, make payments, and access other tax-related services. The agency emphasizes that failing to inform HMRC when the charge becomes applicable can lead to retrospective tax demands and potential interest charges if the debt is not resolved promptly. As salaries continue to rise, the number of families affected by the HICBC is expected to grow. Many parents find themselves unexpectedly crossing the £60,000 threshold following promotions or annual raises, often without realizing the implications. With HMRC offering new options to manage the charge, the focus remains on ensuring compliance and minimizing disruption for affected households.