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

HMRC has issued a fresh warning to parents

[Young family of three with a toddler managing their budget,paying bills and taxes online and calculating monthly expenses at home.Inflation concept.]

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The charge depends on the income of the higher-earning partner(Image: ArtistGNDphotography via Getty Images)

Millions of mums and dads are being cautioned they could face an unforeseen tax demand.

HM Revenue & Customs (HMRC) has issued a new warning reminding households that breaching the 60,000 earnings threshold can activate the High Income Child Benefit Charge (HICBC), resulting in some or all of their Child Benefit needing to be returned. The alert arrives as salaries continue climbing for numerous employees, heightening the likelihood that parents who've never previously been affected by these regulations could now encounter an unexpected tax bill.

In a statement shared on social media, HMRC said: "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 tax body is encouraging impacted households to utilise its newly launched digital service, accessible via the HMRC app or website, enabling qualifying taxpayers to clear the charge through their PAYE tax code instead of completing a Self Assessment tax return.

[Young family with a daughter feeling distressed managing finances, paying bills and taxes]

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HMRC has launched a new service(Image: LordHenriVoton via Getty Images)

The High Income Child Benefit Charge kicks in when either partner in a household has an adjusted net income exceeding 60,000 while Child Benefit is being received.

According to present regulations, the charge progressively rises once income surpasses 60,000, with families required to repay the entire amount when earnings hit 80,000.

The charge depends on the income of the higher-earning partner, irrespective of which parent actually collects the Child Benefit. Previously, many parents were required to register for Self Assessment solely due to the Child Benefit charge.

However, HMRC has now launched a new service enabling many employees to settle the tax directly through PAYE instead. Once signed up, HMRC adjusts the taxpayer's tax code so the charge is collected automatically via their salary or pension.

Who is eligible for the PAYE service?

Parents can take advantage of the new PAYE option if they:

• do not already need to complete a Self Assessment tax return for another reason, such as being self-employed;.
• are paying the charge for the current tax year or the previous one; and.
• register by January 31 following the end of the relevant tax year.

For instance, someone liable for the charge during the 2025-26 tax year can choose to pay through PAYE if they register by January 31 2027. Should they miss that deadline, or are already required to complete a tax return for other reasons, they must continue using Self Assessment.

Parents who have previously completed Self Assessment solely on account of the Child Benefit charge may also be able to exit the system and switch to PAYE by getting in touch with HMRC.

To sign up, taxpayers will need details including their adjusted net income, information about any partner who received Child Benefit and relevant National Insurance details.

HMRC also directs parents towards its mobile app, which allows users to check Child Benefit, view their tax code, estimate tax liabilities, make payments and access a range of other tax and National Insurance services.

The fresh alert arrives as thousands of families remain ensnared by the High Income Child Benefit Charge, frequently following a promotion or yearly salary rise that inadvertently propels them beyond the 60,000 threshold. Not informing HMRC when the charge is applicable can result in parents confronting retrospective tax demands and possible interest charges if the sum owed isn't settled promptly. Further information here.

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