Parents have lost out on £6.8billion since the child benefit cap was introduced

BRITISH families have lost out on £6.8billion in child benefit since the government introduced a cap in 2013.

Everyone used to get child benefit payments but the government introduced new rules so that higher earners didn't get the money.

In that time, HMRC has earned £2.513billion in benefit tax as well as saving £4.3billion from families that have opted out.

The cap is designed so that if either parent in a household earns more than £50,000 you have to pay back some of the money through tax. If either of you earns over £60,000 then you have to pay the whole lot back.

But the cap hasn't been raised in nine years meaning more and more families are being excluded from the help.

As inflation rises year on year the cost of living gets more expensive. At the same time, people usually see their income go up too.

But the child benefit cap has stayed the same, which means more families are being pushed above the limit and having to pay back some or all of the benefit.

Sean McCann, Chartered Financial Planner at NFU Mutual, said: “The £50,000 threshold hasn’t changed since it was introduced in 2013, meaning that more and more families have been caught as incomes have increased."

Some experts are predicting that the income tax thresholds will be increased in the chancellor's budget in March.

These thresholds determine how much salary you can earn before you have to pay higher or additional rate tax.

At the moment, you don't become a higher rate tax payer until you earn over £50,000. That means that anyone who has to pay back child benefit can be considered a higher earner.

If that tax threshold goes up, but the child benefit cap remains the same, basic rate tax payers could lose the help for the first time since it was introduced.

The cap has been extremely lucrative for the government in the nine years that it has been in place.

Government figures obtained by NFU Mutual in a freedom of information request show that government has collected £2.513billion in High Income Child Benefit tax.

This is the money paid back by families where one person earns between £50,000 and £60,000 a year.

On top of that, HMRC has saved £4.3bn due to families opting out of child benefit since the charge was introduced in January 2013.

This figure will include people who earn over the £60,000 cap and don't receive anything, as well as some families who don't want the hassle of paying some benefit back through tax.

Opting out can be dangerous if one parent has given up work to look after the kids - as they may miss out on National Insurance credits and get less state pension as a result.

The cap has also been criticised in the past because it can be seen to penalise households where one parent earns the most money.

This is because the cap is based on the highest earner's salary rather than the family income.

For example, a family where one parent earns £50,000 and the other earns nothing would be immediately subject to the tax.

But if both parents earned £25,000 each, they wouldn't have to pay child benefit back, even though the household income is the same as where one parent is working.

Even more confusingly, a family where both parents earn £49,999 would get full child benefit, even though the family income is almost £100,000.

Some have criticised this structure as it seems to penalise families where one parent works less to take on childcare duties.

Warning thousands of parents could be forced to repay child benefits.

Check if you’re owed £1,100 a year in child benefit if your income has dropped.

UK families are missing out on £16bn in unclaimed benefits – here’s how to claim.