Bye-bye High Income Child Benefit tax charge

Filing a tax return can be a real inconvenience. But what’s worse is having to file one to pay back your child benefit! 

The High Income Child Benefit charge has left many of you understandably confused.

It’s paid automatically, but you’re not necessarily entitled to it in full – bizarre, right? 

Luckily, we have some good news. The confusing High Income Child Benefit tax charge is changing – woohoo!  🎉

What is Child Benefit and how does it work?

Child Benefit is a tax-free payment paid by the government to parents or anyone responsible for raising a child. 👏

How much Child Benefit will I receive?

In the 2023/24 tax year, you can claim:

• £25.50 a week for your first child
• £16.95 a week for each of your other children

Who said there was no such thing as a favourite child? 🤭

You can also get National Insurance (NI) credits to help fill in gaps in your National Insurance record.

This helps to ensure you qualify for certain benefits including your State Pension – winner-winner. 🤑

If you receive Child Benefit, then your child will also receive an NI number without having to apply, shortly before they turn 16.

Claiming your Child Benefit

You can contact HMRC to talk about, change or continue claiming your Child Benefit. The most common way is by post. 

To claim your Child Benefit, fill in this form and send it to HMRC’s dedicated office.📮

Here’s the address:

What is the High Income Child Benefit tax charge?

The High Income Child Benefit Charge (HICB) will apply to you if you earn an income over £50,000.

If you, or your partner, receive an income over this and have been claiming Child Benefit then you’ll have to pay a charge. 😥

How does it work?

The tax charge increases gradually for taxpayers with incomes between £60,000 and £80,000 (as of 2024/25). But, the amount you’ll pay depends on your adjusted net income. 🥅

Your adjusted net income is your total taxable income. This might include your salary, rental income, or money you’ve earned from a side hustle. 

It does not include things such as your trading losses (for the self-employed), pension contributions, Gift Aid, or charitable donations. 🏠

But, of course, nothing’s ever that simple. 

Your Personal Allowance is also included (*audible gasp*).

Yep, that’s right, the first £12,570 of your income, that’s tax-free, is included in your adjusted net income – weird, right? 🤯

How much Child Benefit do you have to pay back?

If you or your partner are earning over £60,000, you’ll have pay a portion of your Child Benefit back to HMRC.

Let’s take a closer look at how it works:

Don’t panic! You can use our handy Child Benefit calculator to figure out just how much tax you’ll actually have to pay.

How is the Child Benefit tax charge changing? 

If you’re someone who pays the High Income Child Benefit charge, plans are being set out so that you’ll no longer have to register for Self Assessment – hooray! 

Instead, you’ll be able to pay the charge through your PAYE tax code, making things a lot less confusing! 

You’ll also no longer have to worry about HMRC fining you for late payments.  

It’s been a whopping ten years since the charge was first introduced, so we think that we can all agree that it was about time things changed! 👏

What If I opt out of receiving Child Benefit?

According to The Guardian, as of August 2020, “more than 620,000 families had opted out of receiving Child Benefit to avoid being charged”. 👋

If like these families, you also want to opt out of receiving Child Benefit, there’s a few things to know first!

Even if you want to opt out, you should still fill in the Child Benefit claim form. You need to state on the form that you don’t want to receive payments.📝

There are a few reasons why you’d still want to claim and pay back your Child Benefit.