Background
Child benefit is paid to households with eligible children. If the claimant or their partner has adjusted net income over the threshold amount, the higher earner will need to repay some or all of the child benefit. This is collected by HM Revenue & Customs (HMRC) and is known as the high income child benefit charge (HICBC).
Where this has occurred the higher earner has been required to complete a self-assessment tax return to either pay the HICBC or in order to be able to arrange collection via their pay as you earn (PAYE) coding.
However, it was previously announced at the Spring Statement 2025 that an online service would be launched to enable the HICBC to be collected through PAYE and remove this requirement to complete a tax return. HMRC’s online service for paying the HICBC through PAYE has recently gone live.
Detail
The high income child benefit charge (HICBC) was introduced in January 2013 to restrict the amount of child benefit that higher earners and their partners can receive. From the 2024/25 tax year, if one partner has an adjusted net income (broadly taxable income less trading losses, gift aid and pension contributions) of more than £60,000 and the couple receive child benefit then the HICBC will apply and they will have to pay back some or all of the child benefit received in the year.
The HICBC is calculated as 1% of the child benefit for every £200 of the higher earner’s income over the £60,000 threshold. If adjusted net income exceeds £80,000, all of the child benefit should be repaid.
For the 2023/24 tax year and earlier years, the threshold was £50,000, with the clawback being at a rate of 1% for every £100 over this amount. The child benefit was then fully withdrawn for adjusted net income over £60,000.
Previously, any individual who needed to pay HICBC had to complete an income tax self-assessment return. If the amount due was under £2,000, this could be collected via the taxpayer’s PAYE code for a subsequent year, but reporting was still required by completing a self-assessment tax return even if this was there only reason for needing a tax return. PAYE taxpayers who are only completing ITSA tax returns in order to pay HICBC can now opt out of ITSA and pay HICBC via PAYE instead. Although this will ease the complexity for many individuals by removing their need to complete a self-assessment tax return, the taxpayer will still need to monitor their liability to HICBC
HMRC have started writing to individuals who appear to be liable to HICBC but are not in self-assessment in order to encourage them to use the new HICBC PAYE service where appropriate to do so.
In order to use this new service, the taxpayer will first need to de-register from ITSA, as HMRC will not do this automatically. The taxpayer should then be able to use the HICBC PAYE service the following day.
Taxpayers should be aware that where they need to pay the HICBC for both 2024/25 and 2025/26 tax years they may end up with two sets of HICBC charges in one year’s PAYE code. This could be either their 2025/26 or 2026/27 PAYE code, depending on when their 2024/25 tax return is filed and when they sign up to use the HICBC PAYE service.
Individuals who no longer wish to receive child benefit payments, because for example it will be fully withdrawn as their or their partner’s income is over £80,000, can opt out of receiving child benefit. There are a number of ways that a claimant can opt out: via the online service, by completing an online form, or by phoning or writing to the Child Benefit Office. Agents cannot opt out on a client’s behalf.
Taxpayers are still encouraged to register for child benefit, even if the household opts out of receiving the money, because the non-working parent receives a class 3 national insurance (NI) credit and it triggers the issue of the child’s NI number just before their 16th birthday.
If you would like more information on the HICBC and any of the points raised above, or are concerned if you have appropriately declared any charge, please contact our Tax Director, Jenny Marks.