High Income Child Benefit Charge | What It Means for Your Family Finances?

Child Benefit is a vital financial support for many UK families. However, if your income rises above a certain threshold, you may become liable for the High Income Child Benefit Charge (HICBC).

Introduced as a way to claw back this benefit from higher earners, the charge can significantly impact your family’s budget and tax responsibilities.

Understanding how it works and whether you should still claim Child Benefit is essential for effective financial planning.

In this guide, you’ll learn who’s affected, how it’s calculated, how to report it, and your options to manage or avoid unexpected costs.

What Is the High Income Child Benefit Charge?

The High Income Child Benefit Charge is a tax designed to recover Child Benefit from individuals with higher earnings. If you or your partner has an adjusted net income above the defined threshold and receive Child Benefit, you may be required to pay this charge.

Even if your partner receives the benefit and you do not, you could still be responsible if your income is higher.

The charge is applied regardless of whether the child is your biological or adopted child. If a child lives with you and someone claims Child Benefit on their behalf, and you contribute at least equally to their care, you may become liable.

The charge only applies to the partner with the higher income, even if they don’t receive the benefit directly. This policy reflects a shift towards means-tested benefits, even within universal payment systems.

Why Does It Exist?

The HICBC was introduced to ensure that the Child Benefit is targeted more fairly, particularly as public spending became increasingly scrutinised.

Here’s why the charge was implemented:

• Reduce Benefit Overpayment: Reclaims state payments from those earning enough not to need them.
• Encourage Equitable Support: Ensures low-income households receive proportionately more support.
• Modernise Welfare Distribution: Aligns family benefits with personal tax responsibilities.

Summary of Key Purposes:

• It applies only to individuals, not combined household income.
• It supports fiscal responsibility within welfare budgets.
• It incentivises accurate tax declarations and benefit claims.

Ultimately, the charge serves as a clawback mechanism to make the Child Benefit system more balanced and cost-effective.

What Are the Updated Thresholds for HICBC in 2025/26 and How Do They Work?

For the 2025/26 tax year, HICBC applies if your individual income exceeds £60,000. The charge gradually increases until your income reaches £80,000, at which point all your Child Benefit is effectively repaid through taxation.

If both partners earn below the £60,000 threshold individually, the charge does not apply, even if your combined household income is higher. This is why the HICBC can seem unfair for single-earner families compared to dual-income households.

Threshold Summary:

Tax Year	Charge Begins (£)	Fully Withdrawn (£)	Tapering Rate
Up to 2023/24	50,000	60,000	1% per £100 over limit
2024/25 onward	60,000	80,000	1% per £200 over limit

Understanding these brackets helps you anticipate liability and plan how to handle your Child Benefit claim accordingly.

How Is Your Adjusted Net Income Calculated for the Tax Charge?

The concept of adjusted net income is critical in determining HICBC liability. It’s not just your salary, but your total taxable income before personal allowances, with certain deductions subtracted.

Included sources:

• Employment and self-employment income
• Rental income and savings interest
• Dividends and taxable state benefits

Allowable deductions:

• Pension contributions (gross)
• Trading losses from previous years
• Gift Aid donations

This adjusted figure is what HMRC uses to determine if you’re liable for the charge and how much you must repay.

Key things to remember:

• Calculate annually, using the tax year from 6 April to 5 April.
• Use HMRC’s online Child Benefit tax calculator for accuracy.
• Ensure you’re factoring in both incomes if you have a partner.

What Counts as Income and What Can Be Deducted?

When calculating your adjusted net income, it’s crucial to know what gets counted and what can be legally deducted. This helps you avoid overpayment or unnecessary filing.

Included as Income	Deductions You Can Apply
Salary, bonuses, overtime	Personal pension contributions (gross)
Rental income and savings interest	Trading losses from self-employment
Dividends, P11D benefits (e.g. car, health)	Gift Aid donations

Failing to deduct eligible expenses could push you unnecessarily over the threshold and create a liability for the charge.

Should You Claim Child Benefit If You’re Over the Threshold?

Yes, you should still claim Child Benefit even if your income is above the threshold. This ensures you receive National Insurance (NI) credits, which are crucial if one parent isn’t working or earns below the NI contribution level.

Claiming without payment means:

• You don’t have to repay anything via HICBC.
• You retain pension credits.
• Your child will receive an automatic NI number at 16.

This can be especially important for stay-at-home parents, new immigrants, or anyone not already qualifying for NI credits.

Comparing Opting Out vs Paying the Tax Charge

Option	Result	Best For
Claim & Opt-Out	No payments made, no tax return needed, but NI credits secured	High earners who want simplicity and pension coverage
Claim & Receive	Must complete tax return and repay part/all via Self Assessment	Those near the threshold or with variable incomes

Deciding between these depends on how far over the limit you are and whether you want to avoid administrative hassle.

How Much Is the HICBC and How Is It Calculated?

The charge is based on how much your income exceeds £60,000. The higher your adjusted net income, the more Child Benefit you’ll repay.

Calculation Method:

• 1% of the Child Benefit is reclaimed for every £200 earned over £60,000.
• At £80,000 and above, you repay 100%.

Example:
If you receive £1,100 in Child Benefit and earn £70,000:

• You’re £10,000 over the threshold
• That’s 50 segments of £200
• 50% of £1,100 = £550 to be repaid

This means while you keep the benefit, you’ll owe part or all of it back based on your exact income.

How Do You Register, Report and Pay the HICBC Through Self Assessment?

If your adjusted net income exceeds the threshold and you choose to receive Child Benefit, you must register for Self Assessment.

How to Register?

• Register by 5 October following the end of the tax year in which your income exceeded £50,000.
• Use the HMRC online registration service to set up your Self Assessment account.
• Once registered, HMRC will issue you a Unique Taxpayer Reference (UTR), which you’ll need for filing your tax return.
• Allow time for processing and delivery of your UTR, especially if registering close to the deadline.

How to Report?

• Complete and submit your Self Assessment tax return each year (usually by 31 January).
• Report your adjusted net income, which includes all taxable income minus allowable deductions.
• Enter the total amount of Child Benefit received by you or your partner during the tax year.
• The system or your tax software will help you calculate the HICBC owed based on your income level and the number of children claimed.

How to Pay?

• You can pay your tax bill online, through your bank, by direct debit, or by debit/credit card.
• In some cases, HMRC may collect the charge through PAYE (your tax code) if you’re employed and eligible.
• The final payment deadline is 31 January following the end of the tax year.
• Late filing or payment can result in penalties and interest charges, so it’s crucial to meet deadlines.

The government plans to allow PAYE-based reporting from summer 2025, but until then, Self Assessment remains mandatory for most affected individuals.

Can You Restart or Reclaim Child Benefit After Opting Out?

Yes, if your circumstances change, you can restart Child Benefit payments. This applies if:

• Your income drops below £60,000
• You have a new child
• You now qualify due to household changes

To restart:

• Use the online service or a paper form
• Call or write to the Child Benefit Office
• It can take up to 28 days to resume payments

You may also be able to backdate payments for up to two previous tax years, protecting your entitlements and avoiding gaps in NI credits.

What If Your Circumstances or Income Change Mid-Year?

Your tax situation and benefit eligibility can change within a single tax year. HMRC allows flexibility, but you must act promptly.

Income Drop

If your income drops below the threshold:

• You may no longer owe the charge.
• Notify HMRC and stop Self Assessment if eligible.

New Child or Family Events

• A new child allows you to claim or restart benefits.
• Moving in with a partner receiving Child Benefit may shift HICBC liability to you.
• Separation changes liability depending on who lives with the child.

Short-term changes like travel or illness don’t affect HICBC unless there’s a permanent change in living arrangement or income.

What Are the Risks of Not Claiming Child Benefit – Especially for Low-Income Partners?

Choosing not to claim Child Benefit to avoid the HICBC may seem simple, but it comes with long-term risks, particularly for non-earning or lower-earning partners.

Top Risks:

• Loss of NI credits, which may impact future State Pension
• Child not getting an automatic NI number at age 16
• Inability to backdate NI credits beyond three months

Other Impacts:

• Reduced eligibility for other benefits
• Less protection in financial hardship
• Potential confusion in co-parenting or split households

To avoid these risks, you should always claim Child Benefit, then opt out of payments if necessary. This keeps your entitlements intact without triggering repayment charges.

Conclusion

The High Income Child Benefit Charge affects thousands of UK families, often without them realising it. If your income is above the £60,000 threshold, it’s essential to understand your reporting duties, the implications of claiming or opting out, and the steps needed to remain compliant.

With accurate calculations, timely reporting, and a clear understanding of how HICBC impacts your family, you can avoid penalties and preserve important benefits like National Insurance credits.

Whether you choose to opt out or claim and repay, this guide empowers you to make a well-informed decision tailored to your financial situation.

FAQs About High Income Child Benefit Charge

Is Child Benefit backdated automatically if I delay claiming it?

Yes, Child Benefit can be backdated for up to three months from the date you apply, provided you were eligible during that time.

What happens if my partner refuses to share income details with HMRC?

You can write to HMRC to ask if your partner’s income is higher than yours; they will respond with a yes or no answer, not specific figures.

Can I switch between receiving and not receiving Child Benefit during the year?

Yes, you can opt in or out of receiving payments at any time based on your income or family circumstances.

Do I need to register for Self Assessment every year for HICBC?

You need to be registered as long as you’re liable for HICBC, even if you’ve paid through PAYE adjustments.

What are the consequences if I don’t report the HICBC to HMRC?

Failing to report HICBC can result in financial penalties and interest for non-disclosure or late payments.

Will the new PAYE system in 2025 replace tax returns for everyone affected by HICBC?

The new PAYE system is expected to simplify the process, but until it’s implemented, Self Assessment remains mandatory.

Can I appeal against penalties for previous unreported years under HICBC?

Yes, you can appeal if you have a valid reason, though ignorance of the charge is rarely accepted as a reasonable excuse.

Read Next:

How to Transfer Child Benefit From One Parent to Another?

Child Benefit Payment Dates 2025 UK | When Will You Get Paid?

How Can You Change Bank Details for Child Benefit Payments in UK?

Child Benefit When Your Child Turns 16: What You Need to Know?