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HMRC clarifies 'for every 200' tax rule that applies to DWP benefit claimants

A claimant asked for help about paying the tax charge

[A woman checks her finances]

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HMRC has clarified the rules around who has to pay a tax charge(Image: Getty)

HMRC has issued guidance about a tax bill that DWP claimants have to pay if you cross a threshold. The tax authority warned in some cases you will "need to inform the department" to get your details updated.

The issue came to light after a customer had a question about a tax charge and how much they would have to pay. Posting on social media, they said: "My adjusted net income for 2026/2027 will be over 60,000. I was going to stop my Child Benefit at the start of the tax year to avoid the HICBC, but never got around to it. If I stop it now, will l still be charged HICBC for the part year?"

The HICBC refers to the High Income Child Benefit Charge. This is where you pay back your Child Benefit entitlement, if either you or your partner's individual income moves above 60,000. You pay back an increasing proportion of your claim as your income moves up beyond this threshold.

200 rule

Guidance on the Government website explains: "You'll pay back 1 per cent of your Child Benefit for every 200 you earn over the threshold." This means once your income reaches 80,000, you have to pay back the whole lot.

Responding to the query, HMRC directed the person to the information page on the gov.uk website about how the charge works. But the customer said they couldn't find the answer to their question in the online details.

They told HMRC: "I have already seen this, but it didn't really answer my specific question. If I ask for my tax code to be changed by estimating my adjusted net income, do HMRC check the HICBC calculation after the tax year and adjust the following year's tax code as necessary?"

Registering online

People who have to pay the charge can do so through their PAYE income tax payments or through self assessment, depending on their situation. If you are going down the PAYE route, you can register online to set this up, in which case HMRC will send details of a new tax code to you and your employer, to collect the amount.

[An HMRC letter]

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Some DWP claimants have to pay back their benefits to HMRC(Image: Getty)

If you are receiving income from a pension, HMRC will send details of the new tax code to your pension provider. Replying again to the taxpayer, HMRC said: "The charge is up to the date your Child Benefit payments stop.

"You would need to inform the department directly so they can update the code with the charge end date." They also pointed the customer to an information page with details about how to get in touch if you have an income tax query.

How much could I have to pay back to HMRC through the High Income Child Benefit Charge?

The amount you will have to pay back depends on the level of your entitlement and what percentage of this you need to repay. Child Benefit is currently worth 27.05 a week for your eldest child, plus 17.90 a week for each additional child you have.

So if you had two children and had to pay back your whole entitlement, you would have to pay the equivalent of 44.95 a week back to HMRC, or 2,337.40 a year.

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