Daily Mail

Victims of the middle-class child benefit CRACKDOWN

One family’s been billed £3,000 because they drive a company car. Another faces a £500 fine after getting a pay rise. They are the . . .

- By Ruth Lythe r.lythe@dailymail.co.uk

FAMILIES who mistakenly claim child benefit are being hit with fines of up to £2,000 and ordered to pay back thousands of pounds.

Money Mail can reveal that tens of thousands of middle- class families are having their finances scrutinise­d by the taxman to find if they have wrongly collected child benefit.

Some are then being hit with backdated bills for years of missed payments and face additional penalties.

Those affected have been caught out by a controvers­ial shake-up to child benefit in 2013 that barred higher earners from receiving the £1,076-a-year payout.

Previously, all parents, regardless of how wealthy they were, received the payments to help with the costs of bringing up children.

But under new rules introduced five years ago, the payment is gradually reduced for families where one parent earns £50,000 gross pay or more.

They lose 1 pc of the payout for every £100 they earn over this level.

Couples with a parent earning £60,000 get nothing and can either opt out of the payment or repay it at the end of the tax year (this second option is taken up by some parents so that stay-at-home mothers receive a tax credit towards their state pension).

The only choice for parents with one earning £50,000 to £60,000 is to claim the full amount and hand back some of the cash at the end of the tax year by filling out a tax return. Anyone who fails to do this faces fines for failing to notify HM Revenue and Customs (HMRC) and for late payment.

HMRC says it has run publicity campaigns informing parents of their duties and parents have no excuse for getting things wrong.

But many parents have been caught out. Some say they have been confused by rules which mean a family with one breadwinne­r earning £50,000 loses some of their child benefit, while a family where each parent earned £49,000 keeps the whole lot.

In some cases, one parent has been unwittingl­y pushed over the £50,000 threshold by workplace perks such as a company car. Other parents where the sole breadwinne­r earned less than £50,000 when the rules were announced have since received pay rises without realising they needed to notify the taxman.

A number of parents say they were unaware they had breached any rules because they were out of the country or did not see any warnings from HMRC.

Many are now struggling to pay huge backdated bills and fines for thousands of pounds.

Fraser Swainston, 41, from High Wycombe, is still battling with the taxman over the £3,000 demand he received in November.

The bill supposedly covered three years of payments from 2014 to 2016, plus a £500 fine.

Fraser, who has three daughters aged eight, five and four, had no idea he owed any money.

For most of the years in question he was earning around £40,000 in his job as an engineer — well below the limit. His wife was at home at the time, caring for their children. When Fraser questioned the bill, HMRC said his company car, a Mazda 6, plus annual fuel allowance, made him a higher earner. The taxman valued the perks at over £10,000, meaning Fraser would have to pay back the child benefit.

‘If I owe the money then I will have to pay, although it won’t be easy to find £3,000,’ Fraser, says.

In a similar case, a man was forced to borrow from his mother to pay back £5,800 in tax and £2,000 in penalties after being unknowingl­y pushed over the threshold by a company car.

Rick Millington, 59, faces a demand for £3,061, plus a £500 fine, for four years of child benefit for his two sons, now aged 18 and 21. In November, HMRC said although Rick had not deliberate­ly avoided repaying the money, he should have registered with the taxman.

The former pilot, who flew transport planes and who was the family’s main breadwinne­r, says he was unaware of the 2013 rule change.

Rick, from near Rugby, who has since retired, says he was out of the country and working night shifts at the time.

He paid the bill immediatel­y but is furious: ‘It seems unfair to fine me given it was an honest error.’

Leighton Clare, 39, from Cannock in Staffordsh­ire, received a £5,300 bill in November for late payments for his three eldest daughters. It was backdated to 2014.

Leighton, a contracts manager, was earning less than £50,000 when the tax charge was introduced. When his income rose, he did not realise that he had to fill in a self-assessment return and repay the cash.

Leighton, who is married to Nicola, a hair stylist, says: ‘I don’t object to paying back the money, but I find it hard to understand that it has taken four years to make me aware of this. It’s a huge amount to repay all at once.’

Posts on internet forums suggest the taxman has sent out a large number of demands in the past few months.

Many have questioned why HMRC has taken so long to identify the missing cash.

Mark Dearlove wrote on Twitter: ‘It has taken nearly three years for the child benefit part of HMRC to tell the tax part of HMRC about those who earn over £50,000. We have had no notificati­on of the requiremen­t until after I got the letter. Paying back £2,500 now . . .’ A user of website Moneysavin­g Expert wrote: ‘I know it’s my fault but I am surprised it will be charging me for two years worth of late payments when I wasn’t even aware of the debt.’

Elaine Clark, managing director of Cheap Accounting, says: ‘The child benefit tax charge is one of the most complex taxes going. I have a lot of sympathy for those who have been caught out. HMRC needs to look at why it has taken four years to work out that this money is owing. Any failure is not a failure of the taxpayer.’

An HMRC spokesman says: ‘ We want to avoid charging penalties. Most parents let us know when their income goes above £50,000.

‘ We urge all customers to check their total income using their payslips, P60s or Personal Tax Account.’

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