A further 54,000 families will be dragged into paying the high income child benefit tax charge by 2030/31 as a result of rising incomes.
A Freedom of Information request submitted by financial advice firm NFU Mutual showed that the number of families liable for the child benefit tax charge will jump from 324,000 this tax year to 378,000 by 2030/31.
The revenue set to be raised by HM Revenue & Customs from the charge is also set to increase from £373 million in the current tax year ending April to £486 million by 2030/31. The figures means the Treasury will receive an estimated £2.57 billion in revenue over the next six years.
In 2024, the Government increased the starting threshold for the high-income child benefit charge from £50,000 to £60,000, stating that this would remove around 170,000 households from paying the charge.
However, increasing incomes means that by the end of the decade, growing numbers of households will be liable for the charge.
Once a person’s adjusted net income reaches £80,000, they must repay all child benefit received.
The high income child benefit charge has received fierce criticism for allowing households with two parents earning £60,000 a year to receive child benefit in full, while a household with one working parent earning over £60,000 would see some or all of the benefit withdrawn.
Sean McCann, chartered financial planner at NFU Mutual, said: “Many are still unaware of the need to inform HMRC once their income exceeds £60,000 and pay any child benefit tax charge due. There have been numerous cases where significant arrears have built up over several years, resulting in unexpected five figure tax bills.
“The onus is on the individual with the highest income in the household to pay any child benefit tax due, this can cause issues with couples who don’t normally share details of their earnings with each other.”
McCann said one way to mitigate the impact of the charge is for people to pay more into a pension, with the tax based on the income of the highest earner in the household after pension contributions.
