You may have to pay a tax charge, known as the ‘High Income Child Benefit Charge’, if you have an individual income over the threshold. Up until 2023/24 tax year, the threshold was £50,000, however, in the Spring budget of 2024, the government has increased the threshold to £60,000. So, if either:
- you or your partner get Child Benefit
- someone else gets Child Benefit for a child living with you and they contribute at least an equal amount towards the child’s upkeep. It does not matter if the child living with you is not your own child.
and you earn above the threshold, you will be liable to the ‘High Income Child Benefit Charge’.
What counts as income?
To work out if your income is over the threshold, you’ll need to work out your ‘adjusted net income’. Adjusted net income is total taxable income minus certain tax reliefs, for example trading losses (for the self-employed), Gift Aid charity donations, and pension contributions.
How much is the charge?
Based on the government’s changes in the Spring budget of 2024, if you earn above £80,000, the tax charged will be equal to the child benefit payment you received. If you earn between £60,000 and £80,000, the rate at which HICBC is charged is halved.
Example –
Jonathan adjusted net income is £70,000 in 2024/25 tax year and he claimed £3,000 of child benefits. Since Jonathan exceeded the threshold by £10,000, he needs to pay £1,500 to the ‘High Income Child Benefit Charge’. (Every £200 earnt above £60,00, you loose 1% of the child benefits claimed).
Who pays the tax charge?
If your individual income is over the threshold and so is your partner’s, then whoever has the higher income is responsible for paying the tax charge.
‘Partner’ means someone you’re not permanently separated from who you’re married to, in a civil partnership with or living with as if you were.
How do I pay the charge?
Individuals who need to pay the charge must submit a Self-Assessment tax return each tax year, even if they are employed, and normally pay their tax through Pay As You Earn (PAYE).
If your income is over the threshold
You can choose too either:
- get Child Benefit payments, and pay any tax charge at the end of each tax year
- not get Child Benefit payments, and not pay the tax charge
If you choose to not get Child Benefit
You can still fill in the Child Benefit claim form. You need to state on the form that you do not want to get payments.
You need to fill in the claim form if you want to:
- get National Insurance credits, which count towards your State Pension
- ensure your child gets their National Insurance number automatically before they’re 16 – otherwise they need to apply for one themselves
Already getting Child Benefit
You can choose too either:
- stop getting Child Benefit – sometimes known as ‘opting out’
- carry on getting Child Benefit and pay any tax charge at the end of each tax year
