You could be handed up to £2,600 in compensation following child benefit error – check if you'll get the cash
HMRC has announced a major effort to correct the mistake, which left around 500 families without payments they were entitled to.
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The error mostly affects parents of 16 to 19-year-olds who continued their education or training outside of regular schools between April 2014 and August 2025.
Due to the blunder, these families were improperly denied child benefit.
Now, HMRC is launching a 'correction exercise' to identify affected families and ensure they receive the money they're owed.
The compensation process is expected to cost £1million and will wrap up by October 2026.
This means that if each of the 500 affected families has one child impacted, they could be entitled to payouts of up to £2,600 per family.
To track down those impacted, HMRC will work alongside local authorities, the Department for Work and Pensions (DWP), and other stakeholders.
A communications campaign will also be rolled out to raise awareness and help families come forward.
The error is set to be officially reversed in new amendments to child benefit regulations, which will take effect from September 2025.
These changes will restore eligibility for young people in certain educational settings, ensuring no one else misses out in the future.
If you think you might be affected, keep an eye out for updates from HMRC or reach out to your local authority for guidance.
All the freebies you can get on Universal Credit
Families who qualify could see significant payouts, so it's worth checking your eligibility.
An HMRC spokesperson said: "About seven million families received child benefit last year.
"We have identified that a very small number, about 500 over 10 years, may not have been paid their correct entitlement.
"We are working with stakeholders to help reach them and will share details on how they can claim soon."
What is the child benefit payment?
Every parent in the UK can apply for child benefit to help with the costs of raising their child.
You can get it if you're responsible for bringing up a child who is under 16 or under 20 and in approved education or training.
The benefit is worth £26.05 a week for your eldest child, and then £17.25 a week for any subsequent children.
For a family with two children who qualify, this adds up to £2251.60 a year.
For just one child, you get £1354.60 a year.
While child benefit is available for all to apply, there is a caveat for higher earners.
If one parent in the household earns over £60,000 per year, a portion of the benefit must be repaid, this triggers the so-called high income child benefit charge.
This means a portion of the benefit must be repaid.
Once an individual's income exceeds £80,000, the entire benefit must be repaid.
What is the high income child benefit charge?
IF you apply for child benefit but earn over £60,000 or live with a partner who does, you'll have to pay the high income benefit charge.
This is calculated as 1% of your child benefit payment for every £200 you earn over the threshold.
The calculation is done based on your adjusted net income, which is the money you earn after paying things like pension contributions.
However, if you earn slightly over the threshold, you can increase your retirement savings to put you back under the limit and continue to claim.
If you do have to pay the charge, the money is paid back via the higher earner's self-assessment tax return.
Once either you or your partner earns £80,000 you will have to repay all of the child benefit money.
What other childcare help is available?
Up to 30 free childcare hours
You may be able to get free childcare for your child aged nine months to four years old if you live in England.
The number of hours working parents can claim depends on the age of their child.
If your child is:
Nine months to two years old, you can get 15 hours per week of free childcare
Three to four years old, you can get 30 hours per week of free childcare
From September 2025, children aged nine months to two years old will qualify for 30 hours per week of free childcare
To qualify, you'll need to earn at least the equivalent of the national minimum wage for 16 hours a week.
Both parents will need to earn the equivalent of at least £166 per week, each with a taxable income of no more than £100,000.
Your two-year-old can also get free childcare if you live in England and get any of the following benefits:
Income support
income-based jobseeker's allowance (JSA)
income-related employment and support allowance (ESA)
Universal Credit and your household income is £15,400 a year or less after tax, not including benefit payments
The guaranteed element of pension credit
Child tax credit, working tax credit (or both), and your household income is £16,190 a year or less before tax
Universal Credit childcare costs
Parents on Universal Credit and in a paid job can have up to 85% of their childcare costs covered, up to £1,031.88 a month for one child and £1,768.94 a month for two or more children.
It doesn't matter how many hours you work.
If you live with a partner, you both need to work to qualify.
You usually have to pay for the childcare and claim back the costs, but if you go back to work or increase your hours you can request for the money to be paid upfront.
Are you missing out on benefits?
YOU can use a benefits calculator to help check that you are not missing out on money you are entitled to
Charity Turn2Us' benefits calculator works out what you could get.
Entitledto's free calculator determines whether you qualify for various benefits, tax credit and Universal Credit.
MoneySavingExpert.com and charity StepChange both have benefits tools powered by Entitledto's data.
You can use Policy in Practice's calculator to determine which benefits you could receive and how much cash you'll have left over each month after paying for housing costs.
Your exact entitlement will only be clear when you make a claim, but calculators can indicate what you might be eligible for.
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