A family has been saddled with huge debts of more than £7,000 that they cannot pay.

Richard and Rebekha Nicholls were shocked when they found out they had to back pay a £7,400 HMRC bill due to a little known rule that they had no knowledge of.

The family started claiming child tax benefit in 2012, after the birth of their first child, Enya. At that time Rebekha stopped working, while Richard worked as a mechanic and had a much lower salary than he does now.

In 2015, Richard got a new job, which vastly increased his salary, although he was still not earning more than the £50,000 threshold.

But as he was given a company car at his new job, this was counted as an in-kind benefit, which was included in his income by HMRC.

The couple now have three children, having also welcomed Pippa and Ivy into the family, and have continued to claim child benefit - which they are entitled to do.

Husband and wife Richard and Rebekha Nicholls
Husband and wife Richard and Rebekha Nicholls

Families to whom the rules apply are paid the full amount, but have to make arrangements to pay the part they are not entitled to back.

They can opt out altogether, but many choose not to as it is linked to National Insurance contributions.

The couple understand why they have received the bill - but are annoyed it has taken so long to come to light and been allowed to build up to such a huge amount.

Richard said: "This all started in October when the tax office said that we should be paying the high income tax benefit charge, and asked us to fill out a self-assessment to figure out how much that we owe them.

"Then at the end of January, we received a letter saying that we owed £2,500.

Join our Hull Tenants United group



"But the following day we got another letter saying that this was wrong and it was in fact £7,400 we owed, and we are still yet to get a final bill figure, so it could be much more.

"This is all because I got a higher paying job three years after we started claiming child benefit, and the company car I was given put me over the income threshold because it is counted as an in-kind benefit.

"The thing that gets me is that, why are we only finding out about this now?

Video Loading

"The HMRC know what my wages are and send me a tax code every year, so why could they not tell us sooner that we had to be paying this charge, because then we wouldn't be in the position that we are in now."

The couple say when they contacted HMRC about their bill they were told that "it was not a bank" and that they could not pay off the bill over the course of a number of years, and if it was not paid in 16 months, they would have to go to court.

They say that they were told that they should take out a bank loan or ask a family member to lend them the money to pay it off, but that is something that they are not able to.

Richard said: "Apparently, this charge only applies to the individual, not the household, so it feels like to me, they are punishing the working man.

"If Rebekha and I were earning £40,000 each, we would have more money between us and not have to pay this charge, but because I am over a certain threshold we do, it does not seem right."

They now feel that they may have to wait and go to court in order to try and settle the bill, hoping that they might be able to get a payment plan that way that they can afford.

Rebekha said: "We just don't know how we are going to be able to pay this. As a family we have gone through quite a lot over the past 12 years, and we have other debts to pay as well on top of this.

"I think that we will have no choice but to try and settle this in court, it is the only way that we can see us getting a payment plan that we can afford.

"Speaking to our friends, we have found out that we are not the only family who have been given a bill like this, and I just want to warn people to make sure that they do not fall into the same trap that we did."

An HMRC spokesperson said that customers liable to the High Income Child Benefit Charge can elect to opt out of receiving payments of Child Benefit and still receive the other advantages of claiming it.

This includes protecting their NI contributions record, as well as ensuring their child receives an NI number in the future.

They said: “We use a wide array of channels to reach those who may be liable to pay the High Income Child Benefit Charge.

"This includes putting information about the charge in packs made available to new parents which tell them how to claim child benefit. We continue to improve our communications including on social media, GOV.UK and via third parties such as family websites.

“If anyone wishes to find out more about the charge, especially whether they are liable to pay it, we encourage them to visit www.gov.uk/child-benefit-tax-charge or call our Child Benefit helpline on 0300 200 3100.”