What is the High Income Child Benefit Charge?

The High Income Child Benefit Charge (HICBC) required Child Benefit to be repaid when the highest earner in a household has an income above a set threshold. Initially, this threshold was £50,000 and was set at 1% of the total Child benefit received for every £100 earned above £50,000. If you had income above £60,000, the tax charge was equal to 100% of the Child Benefit received meaning the full benefit was repayable. From 6^th April 2024, this threshold increased to £60,000 and the taper was halved, meaning that the higher earner would need to receive income of £80,000 before the full benefit was required to be repaid. 

For the purpose of calculating who the higher earner is, a ‘partner’ is considered to be someone who you’re not permanently separated from, who you’re married to, in a civil partnership with, or living with as if you were.

‍How is the High Income Child Benefit Charge calculated?

The HICBC is calculated on an individual basis and not on the household, meaning it only applies if the higher earner has adjusted net income above the threshold (information on the adjusted net income can be found here. If you both receive adjusted net income above the threshold, whoever has the higher income is responsible for paying the tax charge. 

‍How and when do I pay the Child Benefit Charge?

If you’re liable to pay the HICBC, you will need to register for self-assessment and complete an annual tax return. These are due by the 31^st January after the prior tax year i.e. for the 2024-25 tax year (6 April 2024 to 5 April 2025), the return is due to be submitted by 31^st January 2026. The submission date is also the payment deadline. If you have not previously registered for self-assessment but are required to pay the HICBC, you need to register for self-assessment by the 5^th October following the tax year you’re required to pay the charge. ‍

I’m separated from my partner, how do I know if I need to pay the charge?

If you’re currently separated from your partner or ex-partner, you can write to HMRC to ask whether they receive Child Benefit and if they have a higher income than you. HMRC will reply with either “yes” or “no” – you won’t receive any detailed financial information, but you’ll be able to determine if you have any responsibility to pay the HICBC. You can only request this if either you and your partner live together or you separated within the tax year you want the information for.

‍My adjusted net income is above the threshold, should I not claim?

If you earn above the threshold, you should still make a claim for Child Benefit but you can choose to opt out of receiving the funds. By making a claim for Child Benefit, you will be entitled to National Insurance credits until the child is 12 years old, which count towards your state pension. This is especially important if you don’t receive any income sources which would be liable to National Insurance contributions. Your child will also receive a National Insurance number without them needing to apply for one which can sometimes involve a face-to-face meeting. When you complete the Child Benefit form, you can state on the form that you don’t want to receive the payments (Question 62, Section 4). If you’re already receiving Child Benefit but your income now exceeds the threshold, you can choose to either continue to receive the payments and pay the tax charge at the end of the tax year or opt out of receiving the payments. 

‍I now earn below the threshold – how do I opt in?‍

If it is a new application i.e. you haven’t registered for Child Benefit before, you can make a claim online. You will need the child’s birth or adoption certificate, your bank details, your National Insurance number and your partner's National Insurance number (if you have a partner). If you can’t claim online, you can also claim by post or by phone. 

The benefit will be backdated three months from the date you made the claim, provided you were eligible for child benefit within that period. If you’ve previously opted out of receiving Child Benefit, you can use their online service to re-apply or complete an online form. When you opt back in, you have the option to request to reinstate payments for two previous tax years, if applicable. If you wish to do this, you will need to contact the child benefit office via telephone. This is particularly important if you were not aware of the change made in the 2024-25 tax year and would have been entitled to receive all, or a percentage, of the child benefit payments. 

If you want to learn more about this or discuss it with one of our consultants, get in touch here.

‍