In the small print of the Autumn Budget 2024 were some changes to HIBC:
“The government will not proceed with the reform to base the HICBC on household incomes. This is because it would have come at a significant fiscal cost of £1.4 billion by 2029-30 if setting the threshold to £120,000-£160,000, where no families would lose out.123 To make it easier for all taxpayers to get their HICBC right, the government will allow employed individuals pay their HICBC through their tax code from 2025, and pre-prepopulate Self Assessment tax returns with Child Benefit data for those not using this service. The government will also explore how better data use and sharing across government departments can improve the targeting of economic support to households, especially in times of crisis.”
The proposal to move to a household income basis had been announced in Spring Budget 2024, but had met with criticism that it undermines the hard won concept of Independent Taxation – within living memory, pre 1990, husbands were taxed on their wives income.
HIBC creates a lot of tax disputes however and a steady stream of Tribunal cases where tax payers are appealing against the charge or against penalties, as its administration via Self Assessment is not straight forward. With payroll Real Time Information there is no excuse for HMRC not tying up claims to taxpayers income and highlighting, at least to PAYE employees, when its due. Hopefully the announcement abut paying via tax code will be a start to streamlining this and avoiding what is surely a headache for taxpayers, their advisers, the Government and MPs post bags.