Recommendation 23

DWP noted that the government has recently announced a new National Insurance credit for people subject to the High Income Child Benefit Charge.49 It explained that the charge applies when one parent in a household earns more than £50,000, and means that they must complete a self-assessment tax return to pay back some or all of any Child Benefit they have claimed. We observed that some parents will choose to opt out of Child Benefit entirely rather than complete a tax return, which means they miss out on the associated National Insurance credits.50 DWP told us the newly announced credit is designed to fill this gap. It also acknowledged there is a risk that people miss out on this credit and stressed that it wants to avoid a problem similar to HRP occurring again in future due to incomplete Child Benefit or National Insurance records. It told us it is working with HMRC to decide how to hold onto the relevant information long-term, because may need it over 30 or 40 years as people reach State Pension age.51 We asked HMRC whether this new credit would be awarded automatically as a way to avoid incomplete or inaccurate 43 Q 67; DWP ARA 2022–23, page 376 44 Q 37 45 Qq 73–76 46 DWP ARA 2022–23, page 294 47 Qq 3, 48–49 48 Qq 5, 93 49 Q 12 50 Qq 38–39, 47 51 Qq 12, 38–41 16 The Department for Work & Pensions Annual Report and Accounts 2022–23 records in future. HMRC told us it is working through the legislation and aims to make it as simple and easy as possible for customers to claim the new credit, but could not commit to the process being automatic.52 Detecting and preventing further systemic underpayments