If you or your partner earn over a certain threshold and you claim Child Benefit, you may be required to repay some or all of it through a tax charge called the High Income Child Benefit Charge (HICBC). Many families are affected without realising it.
How the charge works
The HICBC applies to the higher earner in a household where Child Benefit is claimed. If your adjusted net income exceeds the lower threshold, the charge claws back 1% of Child Benefit for every £200 of income above the threshold. Once income reaches the upper threshold, the charge equals 100% of the Child Benefit received — effectively making it zero.
The thresholds have changed over time — check GOV.UK for the current figures, as these are updated by each Budget.
Why this catches people out
- Child Benefit is paid to one person, but the charge is applied to the higher earner — even if that person is not the one receiving it
- The threshold applies to adjusted net income, not just salary (it includes rental income, savings interest, etc.)
- The charge must be paid via Self Assessment — people who normally do not file a tax return may need to register
- Many families do not know about it until they receive an HMRC enquiry
Your options
- Opt out of receiving Child Benefit — you avoid the charge but also lose the payment and National Insurance credits
- Claim Child Benefit but pay the charge via Self Assessment
- Make pension contributions to reduce your adjusted net income below the threshold
National Insurance credits and Child Benefit
Claiming Child Benefit (even if you opt out of payments) provides valuable National Insurance credits for the claiming parent. These count towards the State Pension. It is usually recommended to claim and then opt out of payment, rather than not claiming at all.