Background to the report

Child Benefit is paid to around 6.9 million families and supports around 11.7 million children. In 2024-25, HM Revenue & Customs’ (HMRC’s) expenditure on Child Benefit was £13.3 billion, making it the largest individual benefit it paid out.

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In 2024-25, HMRC estimated the overall level of fraud and error resulting from overpayments of Child Benefit as £270 million or 2.0% of associated expenditure. Most fraud and error in Child Benefit occurs because claimants have not updated HMRC about changes in circumstances that affect their eligibility. Common situations include claimants continuing to claim Child Benefit for 16- to 19-year-olds no longer in full-time non-advanced education, or after a claimant has moved abroad.

To address this fraud and error risk, HMRC identified an opportunity to use international travel data held by the Home Office to investigate non-residency in Child Benefit claims. In August 2025, HMRC established a new specialist team to track Child Benefit claimants who may have moved overseas and no longer be eligible for the benefit. We have previously reported that data analytics are a vital tool to make sure the right amount of money goes to the right recipient, and to
find potentially incorrect transactions.

Scope of the report

This investigation provides an independent assessment of HMRC’s specific compliance intervention for Child Benefit using Home Office travel data. The investigation:

  • examines the strategy and governance, design, implementation, management and performance of the intervention
  • highlights what HMRC has learned from this new intervention that will support continued innovation and better management of the associated risks

Conclusions

Fraud and error represents a persistent and constantly evolving threat for HMRC, and the use of data analytics to identify potential fraudulent activity is an important part of its approach. HMRC’s pilot using Home Office travel data identified an innovative opportunity to reduce the impact of a major driver of Child Benefit fraud and error. However, weaknesses in governance and risk management meant that HMRC made changes for the first rollout of the intervention that compromised delivery and performance.

The first rollout did not adequately consider the impact on claimants, suspending payments for more eligible claimants than it needed to, combined with more onerous requirements for many of them to prove their eligibility. While HMRC responded to emerging problems, it had to expend significant efforts to reset the process and expedite reinstating payments where necessary. HMRC has still realised significant savings from the first rollout, but involving greater effort than originally planned, and negative impacts on public trust.

HMRC must continue to try new and innovative approaches to tackle fraud and error and should not be deterred by this experience, but it must ensure it manages risks appropriately through its recently increased governance arrangements. It is now learning lessons from the first rollout and responding to issues highlighted by its internal review to adopt a more careful approach as it relaunches the intervention. It should apply those lessons to other new compliance interventions it may be considering.

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Press release

View press release (24 Jun 2026)

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