Separated couples urged to check for child benefit tax trap

Separated couples are being advised to check that their child benefit claims do not unwittingly leave them exposed to the high-income child benefit charge (HICBC).

The Low Incomes Tax Reform Group (LITRG) is urging child benefit claimants to review their child benefit arrangements if they have separated from the partner they had when the claim was originally made.

In doing this, claimants should check that these arrangements continue to be appropriate to their circumstances and to avoid being unwittingly exposed to the HICBC.

The warning follows a recent First-tier Tribunal decision that a parent was liable for the charge despite the fact that the benefit was paid to their former partner.

Tom Henderson, LITRG 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. The claimant is also the person automatically entitled to National Insurance credits, which may help towards a state pension, and they may also be liable to the high-income child benefit charge.

“Therefore, if the ‘wrong’ person claims child benefit, it could have significant financial consequences. In particular, liabilities to the high-income child benefit charge can arise in cases of separation which feel particularly unfair to those involved.

“We would encourage everyone with children for whom child benefit is being paid – especially separated couples – to check they are aware of who the claimant is and what the consequences of that claim are.”

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