The High Income Child Benefit Charge (HICBC) often catches people off guard. Many only find out they're affected when HMRC writes to them, sometimes years later. If you or your partner earns over £60,000, check how it works before that letter arrives.
What is the High Income Child Benefit Charge?
Child Benefit is paid to anyone responsible for bringing up a child under 16 (or under 20 if they're in full-time education or approved training). The current rates are £25.60 per week for the eldest child and £16.95 per week for each additional child, so a family with two children receives about £2,211 per year.
The HICBC is a tax charge that claws back some or all of that Child Benefit from families where the higher earner has an adjusted net income above £60,000. It's assessed on the individual with the higher income, not on the household. So if one parent earns £65,000 and the other earns £15,000, the HICBC applies to the higher earner regardless of who actually claims the Child Benefit.
The taper: how much is clawed back?
The charge was reformed in April 2024, raising the threshold from £50,000 to £60,000 and widening the taper. For 2026/27:
If the higher earner's adjusted net income is below £60,000, there is no charge and you keep all your Child Benefit.
Between £60,000 and £80,000, the charge tapers in at 1% of the Child Benefit for every £200 of income above £60,000. So at £70,000 (£10,000 above the threshold), the charge is 50% of Child Benefit received. At £80,000, the charge equals 100% of the Child Benefit, so it's fully clawed back.
Above £80,000, the charge stays at the full amount of Child Benefit received. You'd be paying it all back, which makes it seem pointless to claim, though there are still reasons to, which I'll come to.
What is adjusted net income?
Adjusted net income is your total income from all sources minus certain deductions, most importantly pension contributions you make personally (not through salary sacrifice). This is the figure used to assess the HICBC, not your gross employment income.
This distinction matters because pension contributions reduce your adjusted net income. If your gross income is £65,000 and you make £6,000 of personal pension contributions in the year, your adjusted net income is £59,000, which is below the threshold, so no charge applies. This is a legitimate and effective piece of planning, and I'd encourage anyone between £60,000 and £80,000 to look at it carefully.
Other deductions that reduce adjusted net income include Gift Aid donations (the grossed-up amount), losses from previous years, and certain other reliefs. Your employer's salary sacrifice pension contributions don't count here, because they reduce your gross income before it's reported to HMRC. The effect is the same, through a different route.
How to pay the charge
The HICBC is paid through Self Assessment. If you're a higher earner above £60,000 and Child Benefit is being claimed in your household, you need to register for Self Assessment (if you're not already on it) and declare the charge on your tax return.
HMRC has been running a campaign to identify families who haven't been declaring the charge, with some receiving bills covering several years of unpaid charges plus interest. If you've been in this situation, perhaps because you or your partner's income crept above £60,000 a few years ago without you realising, the best thing to do is come forward voluntarily through HMRC's disclosure facility rather than wait to be found. Voluntary disclosure usually results in lower penalties.
Should you still claim Child Benefit even if you'll pay it all back?
Yes, in most cases, for two reasons. First, claiming Child Benefit is what generates your child's National Insurance number when they reach 16. If you never claimed, they won't automatically receive their NI number, which causes administrative problems later. Second, Child Benefit claims count towards State Pension qualifying years for parents who aren't working or earning enough to pay NI. If you stop claiming, you might lose those credits.
The practical solution if your income is above £80,000 is to claim Child Benefit but elect to receive it at a nil rate, which HMRC allows. You get the NI credits and the NI number protection, without receiving any payments and without triggering the charge.
A worked example
Take a family with two children where the higher earner has an adjusted net income of £72,000. Child Benefit received is £2,211 per year. The higher earner is £12,000 above the £60,000 threshold. The charge is 1% per £200, so 60% of £2,211 = £1,327. Net Child Benefit retained after the charge: £884. It's still worth claiming. Making £6,000 of pension contributions would reduce adjusted net income to £66,000, which cuts the charge to 30%, and the family would retain £1,548 of Child Benefit instead.