Our latest article explains what the High Income Child Benefit Charge (HICBC) is and how to disclose it on your self-assessment tax return.
The High Income Child Benefit Charge: What is it?
If you or your partner earn over £60,000 a year, you may have to pay the High Income Child Benefit Charge (HICBC). A partner is classed as someone that you are married to, in a civil partnership with or living with as if you were and are not permanently separated from. You may be required to pay the HICBC if:
- Someone else gets child benefit for a child residing with you, and they contribute at least the same amount towards the child’s maintenance.
- You or your partner get child benefit.
Please note that it doesn’t matter if the child residing with you is not your biological child or not for the HICBC to apply.
Regardless of who claims or receives the benefit, HICBC is calculated on the partner with the highest earnings based on their adjusted net income. Adjusted net income is the total taxable income before any allowances are deducted, and it includes interest from savings and dividends.
As of 6th April 2024, child benefit is withdrawn at a rate of 1% for every £200 over the £60,000 threshold. The child benefit is completely withdrawn when the higher earner earns £80,000 or more per year.
To get an estimate of your adjusted net income, please use the government’s child benefit tax calculator.
Who is liable for the High Income Child Benefit Charge?
In the event that you and your partner’s adjusted net income exceeds the £60,000 threshold, whoever has the higher income is liable for the tax charge. If only one of your adjusted net incomes exceeds the £60,000 threshold, you can:
- Opt out of receiving child benefit payments and not pay the tax charge
- Receive child benefit payments and pay any tax due at the end of the tax year
Opt out of child benefit payments
Even if you choose to opt out of receiving child benefit payments, it is recommended that you still complete the form. Simply state that you do not want to receive payments. By completing the child benefit form, your child will automatically be issued a National Insurance number. This is usually issued to them before they turn 16. Don’t worry; if you do not complete the child benefit form, your child can apply for a National Insurance number online when they are older. Completing the child benefit form will also get you National Insurance credits, which count towards benefits such as the state pension.
What do you do if you are already receiving child benefit payments
If you are currently getting child benefit payments, you have the following options:
- Continue to receive child benefit payments and make any tax payments due at the end of the tax year
- Opt out of receiving child benefit payments
If you are eligible for the High Income Child Benefit Charge, do you need to file a self-assessment tax return?
Even if the lower earner receives the child benefit, the partner earning the higher income is responsible for filing a self-assessment tax return. Even if your only income is paid via PAYE, you still need to complete an annual tax return and register for self-assessment if you are required to pay the HICBC. This is because HMRC collects the HICBC via a self-assessment tax return. HICBC applies to each tax year, from 6th April to 5th April the following year. Therefore, you will need to complete a tax return for each year the HICBC applies.
The Self-Assessment Hub has lots of useful articles to help you
If you or your partner are required to pay the HICBC and have never submitted a self-assessment tax return before, it can seem confusing, and you may wonder where to start. The Self-Assessment Hub has lots of useful articles and guides to guide you through the self-assessment process and help you understand your requirements when filing a tax return. For example, below are some useful articles on our website that you may find helpful:
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