The new figures follows years of criticism that the rules were “unfair, confusing, and disproportionately punitive”.
UK households urged to ‘opt out’ of HMRC rule or face ‘penalty’ in post
An ” unfair” tax rule could cost you thousands in retirement. The new figures follows years of criticism that the rules were “unfair, confusing, and disproportionately punitive”.
The High Income Child Benefit Charge (HICBC) is coming under fire from campaigners. New figures obtained by wealth manager Quilter via a Freedom of Information request show that just 75 penalties for “Failure to Notify” were issued in 2023/24, down from 7,007 the previous year.
Holly Tomlinson, financial planner at Quilter said: “If you opt out of receiving Child Benefit to avoid the charge, make sure the parent who is not working or earning less still gets their National Insurance credits.
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“These credits count toward the state pension, and missing them could leave families worse off in retirement.” More than 712,000 families have now opted out of receiving Child Benefit altogether, affecting over a million children.
Tomlinson said: “The collapse in these penalties is no accident — it reflects the pressure that has rightly built up over years about how unfair the system was.
“Huge media attention highlighted the absurdity of a single parent losing all their ChildBenefit while a couple each earning just under the threshold could keep the lot.
“The Labour Party Government has finally accepted this doesn’t pass the fairness test and is now using carrot rather than stick to help people keep to the rules. In the meantime, families still need to tread carefully.
“If you opt out of receiving Child Benefit to avoid the charge, make sure the parent who is not working or earning less still gets their National Insurance credits, which count towards the state pension.
“And for those hovering near the income threshold, salary sacrifice into a pension can be a wise financial planning tactic — it reduces your adjusted net income and can bring you back below the charge entirely.”
Tomlinson added: “Making pension contributions — especially through salary sacrifice — can help bring you under the threshold and reduce the amount of benefit you repay.
“It’s one of the few ways to protect your Child Benefit while also strengthening your retirement savings.”