How is the High Income Child Benefit Charge (HICBC) calculated?

Child Benefit is provided to households with eligible children. However, if the claimant or their partner has an adjusted net income above £60,000, the higher earner is required to repay some or all of the benefit, known as the High Income Child Benefit Charge (HICBC).

The charge is applied at a rate of 1% of the Child Benefit for every £200 of adjusted net income over £60,000. This means the benefit is fully clawed back once the adjusted net income reaches £80,000.

How is HICBC collected?

HMRC has launched a new service that allows taxpayers to pay the High Income Child Benefit Charge (HICBC) through PAYE, removing the need for many to complete a Self-Assessment tax return.

Previously, anyone who owed HICBC had to register for Self-Assessment, even if the charge was under £2,000 and could technically be collected via their PAYE code. Now, if you’re only in Self-Assessment to pay HICBC, you can opt out and have the charge collected automatically through your salary.

In 2022/23, around 440,000 people were liable for HICBC. HMRC will soon be writing to around 100,000 individuals who appear to owe the charge but aren’t in Self-Assessment, encouraging them to use the new PAYE option.

While this change removes the admin burden for many, it’s still important to keep an eye on your adjusted net income each year to ensure you’re meeting your HICBC obligations.

How to switch to PAYE for HICBC:

• First, de-register from Self-Assessment (HMRC won’t do this for you).
• You can then start using the HICBC PAYE service the next day.

A welcome step towards simplifying the tax system for busy families.

Taxpayers who need to pay HICBC for both 2024/25 and 2025/26 may end up with two sets of HICBC charges in one year’s PAYE code. This would be either their 2025/26 or 2026/27 PAYE code, depending on when they file their 2024/25 tax return and when they chose to use the HICBC PAYE service.

Individuals who complete Self-Assessment tax returns for other reasons will still need to do so.

Opting out of Child Benefit

If you or your partner’s income is over £80,000, your Child Benefit will be fully withdrawn through the High Income Child Benefit Charge (HICBC). In this case, you may choose to opt out of receiving Child Benefit payments to avoid the need to repay them.

There are several ways to do this:

• Via your online Personal Tax Account
• By completing an online form
• By phoning or writing to the Child Benefit Office

Please note: Agents cannot opt out on behalf of clients, the claimant must do this themselves.

Even if you don’t want to receive the payments, it’s still a good idea to register for Child Benefit. Why?

• The non-working or lower-earning parent may receive Class 3 National Insurance credits, which count towards their State Pension.
• Registration also ensures your child is automatically sent a National Insurance number before they turn 16.

This can be a wise move for long-term financial planning, even if no payments are made.