Is High Income Child Benefit Charge to Be Scrapped in 2025?

The High Income Child Benefit Charge (HICBC) has been a point of contention since its introduction over a decade ago.

While recent political shifts and budget statements have brought hopes of reform or even removal, the latest announcements indicate that the high income child benefit charge is not being scrapped in 2025, despite previous plans suggesting otherwise.

With households across the UK still navigating the complexities of child benefit entitlements, taxation rules, and proposed policy changes, it’s vital to understand what’s happening, why changes were proposed, and what families can expect in 2025 and beyond.

What Is the High Income Child Benefit Charge and How Does It Work?

The High Income Child Benefit Charge (HICBC) is a tax designed to reclaim child benefit payments from higher earners. Introduced in 2013, it was aimed at reducing benefit payments to wealthier families without means-testing the initial claim process.

If an individual earns above a certain threshold, they are required to pay back part or all of the child benefit received for their household. The calculation is based on the income of the higher earner in the household, not joint or household income.

Income Thresholds and Tapering

As of the 2024/25 tax year, HICBC applies as follows:

Income Bracket	Repayment Percentage	Explanation
£50,000 – £60,000	1% for every £100 earned above £50,000	Partial benefit clawed back
£60,000 – £80,000	Full benefit reclaimed gradually	No benefit at £80,000+
£80,000+	100% of the child benefit repaid	The entire benefit is returned via tax

While this structure may appear straightforward, it has long been criticised for being unfair to single-income households and for penalising sole earners while allowing dual-income families with higher combined earnings to retain benefits.

Why Was There a Proposal to Reform or Scrap the HICBC?

The current HICBC model has been labelled “inequitable” by financial experts, parents, and even former Chancellors. The root issue lies in how the charge is assessed, it focuses on individual income rather than total household income.

This leads to several contradictions:

• A single parent earning £60,000 repays child benefit, while a couple each earning £49,000 (combined £98,000) can retain the full benefit.
• The administrative burden of declaring and repaying the charge, usually via self-assessment, adds complexity and confusion.

For these reasons, the previous Conservative government proposed reforms, including replacing individual assessments with household-based calculations. Many viewed this as a step toward a fairer and more transparent benefit system.

What Were the Planned Changes to the High Income Child Benefit Charge?

In the March 2024 Budget, then-Chancellor Jeremy Hunt outlined significant changes to HICBC, scheduled for April 2026, with some early adjustments kicking in from April 2024.

These plans included both financial and administrative changes aimed at easing the burden on families and streamlining processes.

Proposed Adjustments (Now Cancelled)

Aspect	Previous System	Proposed Reform (Scrapped)
Assessment basis	Individual income	Household income
Lower threshold	£50,000	£60,000 (implemented April 2024)
Full withdrawal threshold	£60,000	£80,000 (implemented April 2024)
Future upper threshold idea	Not applicable	Possibly up to £160,000 by 2026
Administration method	Self-assessment (SA)	PAYE tax code by default (still in effect)

The reforms were intended to correct the perceived injustices of the system and broaden eligibility for more families by reflecting true household earnings rather than penalising high single incomes.

Why Has the Government Decided Not to Proceed with the Reform?

The 2024 Autumn Budget, delivered under Chancellor Rachel Reeves, made no verbal mention of child benefit changes. However, a line buried within the Budget document confirmed that the proposal to base HICBC on household income has been abandoned.

The reason? Cost.

According to the Treasury’s own assessment, implementing the reform would have cost the government £1.4 billion annually by 2029–30, especially if higher thresholds (e.g., £120,000–£160,000) were introduced.

This financial burden was deemed too high, especially in the context of broader fiscal tightening and spending priorities post-pandemic.

How Will the Current Child Benefit System Continue in 2025?

Despite scrapping the major reforms, the government will maintain some changes introduced in 2024, particularly the increased income thresholds and administrative updates.

Updated Child Benefit Rates for April 2025

From April 2025, the child benefit amounts will rise slightly in line with inflation:

Child Position	Current Weekly Rate	April 2025 Rate
First/Only Child	£25.60	£26.05
Additional Children	£16.95	£17.25

These rates are tax-free, but become taxable under the HICBC structure once the income thresholds are met.

Only one person per child can claim the benefit, and eligibility is retained until the child turns 16 (or 20 if they remain in approved education or training).

What Administrative Changes Are Being Introduced Instead?

Although the core structure of the HICBC remains in place, administrative improvements are being implemented to address long-standing frustrations among parents.

Paying HICBC via PAYE Instead of Self-Assessment

Starting in 2025, taxpayers liable for the HICBC can opt to have the charge collected automatically through their PAYE tax code, rather than needing to file a self-assessment tax return.

This change is expected to:

• Simplify the tax process for thousands of families
• Reduce late filing penalties and confusion
• Improve overall compliance and reduce under-claiming

Laura Suter, Director of Personal Finance at AJ Bell, noted that while this is a helpful step, it doesn’t fix the underlying fairness issue, it merely streamlines how the charge is paid.

What Are the Impacts on Families Across Different Income Levels?

The inconsistencies in the HICBC system mean families with similar overall incomes can experience very different outcomes. Let’s examine two common scenarios to highlight the disparity.

Scenario Comparison:

Family Type	Earner 1	Earner 2	Household Income	HICBC Payable?
Single-earner household	£80,000	£0	£80,000	Yes – full charge
Dual-earner household	£49,000	£49,000	£98,000	No – full benefit
Moderate-income household	£60,000	£10,000	£70,000	Partial charge

These differences underline why so many have pushed for household-based assessments. As it stands, single-income families continue to shoulder a disproportionate tax burden, despite having lower total household incomes in some cases.

Are There Alternative Solutions to Fix the System?

Although scrapping the High Income Child Benefit Charge (HICBC) reform was deemed too costly, discussions around alternative solutions are still ongoing.

One proposal is to increase the income threshold further, bringing it more in line with average household earnings across the UK. Another suggested option is to index the thresholds to inflation, ensuring they rise in step with wage growth rather than falling behind.

Some argue for means-testing the benefit at source, rather than reclaiming it through the tax system, which could simplify administration for families. Others advocate reintroducing universal child benefit, removing the need for HICBC altogether.

Despite these ideas, each carries financial and administrative challenges, and without political consensus, large-scale reform remains unlikely in the near future.

What Does the Future Hold for the High Income Child Benefit Charge?

While the government has chosen not to proceed with the proposed household-income-based reforms in 2025, the conversation is far from over.

Several factors could reignite reform debates:

• Public pressure from affected families
• Changes in political leadership or policy priorities
• Widening gaps in benefit distribution across households
• Improved government revenue, enabling future investment in welfare reform

For now, the HICBC remains intact, albeit with slightly softened thresholds and simpler payment methods. Parents must continue to monitor their income and decide whether claiming the child benefit is financially worthwhile.

Conclusion

The High Income Child Benefit Charge was introduced with a clear goal: to ensure fairness in distributing public funds. But more than a decade later, it has arguably done the opposite.

While some reforms are being made, such as shifting collection to PAYE, the core structure remains problematic. By scrapping plans to assess child benefit on a household income basis, the government has chosen administrative convenience over equity.

Families across the UK, particularly single earners, will need to continue navigating an inconsistent and often confusing system.

Whether a future government will revisit these issues remains to be seen, but for now, the question, “Is the high income child benefit charge to be scrapped in 2025?”, has a clear answer: No, but the debate isn’t over.

Frequently Asked Questions

Who currently pays the High Income Child Benefit Charge?

Anyone with an individual income above £60,000 who claims child benefit, or whose partner does, will start repaying part or all of the benefit via the HICBC.

Has the government cancelled all child benefit reforms?

No, only the plan to base the charge on household income was scrapped. Administrative changes, like paying via PAYE, are still moving forward.

How do I avoid paying the HICBC?

You can opt out of receiving child benefit payments, but it’s still advisable to register for the benefit to retain NI credits and other entitlements.

Will the income thresholds rise again in future?

Possibly, though there are no guarantees. Threshold changes are often linked to political will and fiscal room in future budgets.

Can I still claim child benefit if I earn over £60,000?

Yes, you can claim it, but you’ll need to repay some or all of it through the HICBC unless you opt out of payments altogether.

What are National Insurance credits and why are they important?

NI credits are given when you claim child benefit, helping protect your eligibility for a full State Pension even if you’re not working.

How is the HICBC paid if I’m employed?

From 2025, employed individuals can have the charge deducted through their PAYE tax code instead of submitting a self-assessment tax return.