High Income Child Benefit Charge: Everything you need to know

Key Points:

  • Threshold Raised from £50,000 to £60,000
  • Prior to change, complete withdrawal of benefit if income exceeded £60,000.
  • Post Spring Budget ‘24, complete withdrawal of benefit if income exceeds £80,000.
  • Can only claim backdated Child Benefit for up-to 3 months
    • If you’re entitled to the benefit and haven’t already – Claim!

What is the High Income Child Benefit Charge?

The High Income Child Benefit Charge (HICBC) is applicable when a taxpayer’s income exceeds a threshold set by the government and either they, or their partner, receive child benefit for at least one week during the tax year. It was designed to claw back benefits from those on a “high” income. Presently, the charge is imposed on the partner with the highest adjusted net income.

Prior to 6 April 2024, this threshold stood at £50,000 and the charge imposed a 1% tax on every £100 earned above this threshold. This led to a complete withdrawal of Child Benefit once income reached £60,000.

Spring Budget 2024: What were the changes?

In his Budget statement on 6 March 2024, Chancellor Jeremy Hunt announced that, starting 6 April 2024, the HIBC threshold would be raised from £50,000 to £60,000. Additionally, the taper for the HICBC, determining the rate at which Child Benefit reduces for incomes surpassing the threshold, would be halved. Where previously the claw back would be £1 for every £100 earned above the threshold, the new rules mean that £1 in every £200 above the earned threshold would be clawed back by the Governments.

Consequently, as of the 2024/25 tax year, Child Benefit will cease entirely if the top earner’s income exceeds £80,000. So, tax paying households who are entitled to child benefit, and where the highest earner is earning up to £80,000, are still encouraged to claim child benefit as there would still be some financial benefit to them. It must be noted that you can only obtain backdated child benefit for up to three months.

The income referred to in this article what is known as net adjusted income which is your gross income less any pension contributions. Making pension contributions personally can not only provide additional tax relief but it may also allow you to be entitled to child benefit when your gross income exceeds the limits we refer to in this article. Please get in touch if you would like any further information relating to pension relief.

The future of HICBC

The Chancellor has disclosed plans for the Government to consult on reforming the HICBC to base it on household income instead of individual income. The Government aims to implement this reform by April 2026. No further details have been released to date, but there are likely to be more changes in the not-too-distant future.

HM Revenue & Customs (HMRC) administers the HICBC through self-assessment. Individuals subject to this charge must file an annual tax return if they haven’t already done so.

How to claim higher child income benefit

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